David Hamilton: I thank the Secretary of State for that answer. First, may I welcome the Chancellor's statement yesterday that moves will be made to help families caught in the fuel poverty trap? From the Scottish perspective—and for me as an ex-miner—it is also welcome that we are now moving forward on carbon capture and on setting up a plant in the UK. My right hon. Friend has announced that the energy White Paper will be published in May. Would it not be prudent to consider the possibility of cutting across all the Departments that currently deal with energy and set up an Energy Department?

Alistair Darling: Actually, the press releases were issued at the same time, and deliberately so. As the hon. Lady knows, there have been problems with the grants, because the current arrangement is unsatisfactory: at the beginning of each month we make grants available and they run out almost immediately. We have also found that about £5 million of claimed grants have not been spent. The industry knows that there are problems, and we do too. I am glad that the hon. Lady acknowledges that additional money is being made available, and I would like us to take the necessary time to get the scheme right so that we do not repeat past mistakes. Up until yesterday evening, the industry itself had said that we needed to have discussions with it to make sure that the scheme works satisfactorily. It is important that we get the revised scheme up and running. It is also important that the scheme should be time limited to encourage people to do what they can to make their homes more energy efficient and also less dependent on carbon sources of energy generation. The scheme will be in place, but it is better to get it right than again to rush into doing something and to repeat the same mistakes that were made in the past.

Charles Hendry: The Secretary of State has had eight months since the energy review in which to prepare the White Paper. He tells us today that it will be published in May with the same certainty that he told us on an earlier occasion that it would be published in March. If he carries on like this his Department will have been abolished before it gets to be published. Does he not understand that those postponements are delaying vital investment decisions in future generating capacity while investors wait for details about a cap-and-trade system, the future of renewable obligation certificates or ROCs, feed-in tariffs, the role of Ofgem and the whole future of the planning system? He cannot just blame that on the judicial decision to require better consultation, as there are many other outstanding issues. Does he not understand that our energy security requires that we have a Government who are prepared to act and lead rather than a Government who put off the difficult decisions?

Alistair Darling: That is a bit rich coming from a party that does not have a coherent energy policy. The hon. Gentleman will recall that following the judicial review, I said that it was likely that the White Paper would be published in May, but that if I could publish it before Easter, I would. As there is precisely one week between now and the Easter recess, it is perhaps a statement of the obvious that it will not be possible to publish it next week, so I thought it helpful to tell the House that it will definitely be published in May.
	On the hon. Gentleman's substantive points, yes, I know that the industry wants a degree of certainty, but it is not possible to publish an energy White Paper without the consultation paper on nuclear alongside it, because nuclear is an important part of that consideration. I want to make sure that we get the nuclear consultation right, and I do not have the slightest doubt that there are those who will want a judicial review whatever we decide; some people are implacably against nuclear, come what may. However, I want to get these things right, and the overwhelming view in the industry is that it is important that we publish the two papers together, which I will certainly do.

Margaret Hodge: I thank the hon. Gentleman for that very helpful question. The Chancellor's excellent Budget statement yesterday spelled out our very successful record in delivering sustainable macro-economic stability and our equally successful performance in making effective micro-economic interventions to remove the barriers that prevent markets from functioning efficiently. That has enabled us to raise productivity rates and to enhance UK competitiveness. Since 1997, we have halved the previous gap in UK output per worker compared with France, and closed the gap in output per worker compared with Germany. The Department of Trade and Industry has played its part in stimulating competition and enterprise, enhancing flexibility, and promoting science, innovation and skills. We have provided first-class stewardship of the economy that has helped to raise productivity rates, which only a Labour Government can do.

Margaret Hodge: I agree with the hon. Gentleman that this is an important issue, which is why we have done something about. We have reduced the figure that we inherited—6 million adults with no basic skills—to the still far too high figure of 5 million. I agree entirely that we must continue to work to provide the basic skills, because it is high skills that will enhance our productivity rates. We in the DTI do play our role across government in ensuring that we have the proper structures, programmes and interventions in place to do just that.

Alistair Darling: But should not we be encouraging more companies to invest in research and development? The hon. Gentleman must know that our future lies in our ability to innovate and to undertake research and development, yet we have it officially from Plaid Cymru that it is all baloney. Surely, that is no way to build a successful Wales or a successful Britain. The changes we announced yesterday in relation to reducing the rate of both corporation tax and basic income tax will help businesses. On top of that, the fact that we are simplifying allowances, making sure that there is relief and help for companies that invest up to £50,000, demonstrates the differences between Labour and the hon. Gentleman's party: we want to encourage enterprise and innovation.

Alistair Darling: As I said to his hon. Friend the Member for Clwyd, West (Mr. Jones) earlier, we are making changes to the taxation of small businesses because we need to deal with the growing problem of people who are incorporating to avoid paying tax. If the hon. Gentleman is saying that that is all right by the Tories, I do not agree with him. It is far better to move to a simpler system with two rates of allowances running at the same time so that we can encourage businesses to invest. Increased allowances of up to £50,000 are being made available, but the lower rates of corporation tax and income tax will help businesses. That is exactly what is needed to meet the long-term challenges that we face in the future.

Malcolm Wicks: The hon. Gentleman will know that, quite properly, I cannot comment on a particular project that is going through the planning process. That would not be the right thing to do. All these matters are, of course, considered very carefully on environmental grounds. We hope that UK coal production has a significant future in Britain—an issue discussed in the Coal Forum. UK production amounted to some 9.4 million tonnes of deep-mined coal and 8.6 million tonnes of surface-mined coal. The hon. Gentleman will understand that that makes a not insignificant contribution to energy supplies. Given the difficulties in world markets, we need to produce more of own energy in Great Britain. We need a balanced and rational approach to the issue, but none of my comments relate to the particular project in the hon. Gentleman's constituency.

Alistair Darling: I suspected that the hon. Gentleman would raise that point—and I am worried that there have been only two applications. The difficulty is that in order to qualify for the grant, a project has to have been operating in the sea for three months. In other words, the idea was to help projects that had significantly proved themselves to be a real possibility for development. There are other grants around, however, to help with development at a far earlier stage. I am reluctant to reopen this matter, because it is important that we encourage projects that have a real chance of success. If it appears that no projects have reached that stage, however, perhaps we ought to look at some other form of assistance. The hon. Gentleman and I both agree that marine generation of electricity is important, and there are good examples of such work being carried out in his own constituency. The reason why this grant is difficult to get is that it sets quite high criteria for eligibility.

Greg Mulholland: Does the Minister not agree that when the Government are about to embark on a huge post office closure programme, which he has acknowledged will have a huge impact on consumers throughout the country who rely on that important service, the idea of simultaneously abolishing the Post Office watchdog is madness?

Jim Fitzpatrick: The hon. Gentleman has participated in many of our debates on the future of Post Office Ltd. There is clear recognition that the estimated £4 million a week that Post Office loses is unsustainable, and there is consensus across the board that something must be done to put the post office service on a more sustainable footing for the future. That is agreed by the National Federation of SubPostmasters and by the Select Committee on Trade and Industry, and we are doing our best to ensure that that happens. As I said, my right hon. Friend the Secretary of State will make his announcement in due course—in May—and we hope that as a result of that, the future of Post Office Ltd will be more secure.

Philip Dunne: The Chancellor's flagship stop-start scheme to promote the domestic renewable energy industry, the low carbon buildings programme, received 10,000 online applications at 9 am on 1 March. Only 186 were approved. Does the Minister expect that the 50 per cent. increase in funding announced yesterday in the Budget will give rise to a 50 per cent. increase in successful applications—from under 2 per cent. to under 3 per cent.?

Margaret Hodge: We have 1 million women entrepreneurs, who contribute £60 billion GVA—gross value added—per annum to the UK economy. If we had the same rate of women's entrepreneurship in the UK as they have in the USA we would have 700,000 more businesses adding to the wealth and well-being of the UK economy. I am actively tackling the barriers that prevent women from setting up their own businesses. For instance, I am addressing the gender penalty that women face when borrowing from banks, whereby they pay 1 per cent. more than men over the base rate. That is over £80 a week more in interest payments each month on £100,000 loan, just for being a woman. It should make no difference whether a man or a woman walks into a bank; each should walk out with the same deal. I am meeting the British Bankers Association later today to discuss and address that issue.

Margaret Hodge: I agree entirely with what my hon. Friend says. That must be achieved through both our work on education and skills training and our efforts to encourage entrepreneurship among women, especially as they take the decision to set up their own businesses at a different time from me—perhaps after they have had their first child, or when their children have left home. Such work to encourage women into entrepreneurship in manufacturing will be an important aspect of righting the situation.

Sadiq Khan: My hon. Friend will be aware that earlier this week there was an excellent debate on the commemoration of the 200th anniversary of the abolition of slavery. She attended the entire debate, and will have heard the comparisons that were drawn between modern-day slavery—human trafficking—and slavery 200 years ago. In light of that, will she let us know what progress has been made in ratifying the Council of Europe treaty to which she referred earlier?

Meg Munn: My hon. Friend says that we had an extremely interesting debate, and indeed we did; it was possibly the most interesting and informative debate that I have attended in this House. He rightly draws a parallel, and I am pleased to say that the Council of Europe convention will be signed tomorrow. We will seek to set out the action that we will take to move towards ratification. The Government take signing such conventions seriously, and have not wanted to do so until we were in a position to make rapid progress towards ratifying it. The UK human trafficking action plan will be published at the same time, and that will give hon. Members a great deal more detail on the subject.

Jack Straw: Those are tired old lines that should have been used yesterday.
	On Zimbabwe, I am glad that the right hon. Lady welcomes the proposed statement. She is absolutely right in what she says about the way in which that once wonderful country has collapsed as a result of the mismanagement, and much worse, of President Mugabe. One figure tells it all: life expectancy has shifted in recent years from the age of 60 to 34.
	I am glad that the right hon. Lady welcomes the statement on Northern Ireland, too. Let me make it clear again, as I did last Thursday, that the choice for the Northern Ireland parties on 26 March—next Monday—is either devolution or dissolution. There can and will be no legislation to alter that date. Her Majesty's Government believe that the people of Northern Ireland want to see the institutions restored and very much hope that the parties will seize the opportunity of restoration on 26 March.
	On Alistair Graham, I pointed out last week that it was perfectly normal for the term of office of the Chairman of the Committee on Standards in Public Life to end after one term, and that has indeed been the consistent practice. In respect of trust in politics, I will send the right hon. Lady interesting opinion survey material which shows that in recent years trust in politicians has actually increased. It is particularly high where people know and appreciate the work of their own politicians. That may have something to do with the fact that we have been returned to office in three successive general elections.
	The right hon. Lady then wittered on about the Chancellor and a tax-adding Budget. She has obviously not read the Red Book, or the National Audit Office endorsement of the figures in it, because if she looks down the figures in table 1.2, to take one of the many tables, she will see that hard-working families have in fact benefited significantly as a result of my right hon. Friend's Budget. She talks about 3.5 million families. Since she raises the issue of tax credits, let me tell her that their introduction has transformed the lives of millions of hard-working families. Moreover, it has ended the genuine and serious evil under the Conservatives whereby people were trapped in unemployment and unable to get out of that trap because it would cost them more to go back to work than to stay on benefit.
	I also say to the right hon. Lady that what we have had from the Chancellor—who has been a brilliant Chancellor over the past 10 years, setting this country on a course, from bottom among the G7 countries to second only to the United States—is sensible prudence in being able to balance moderate increases in public spending against what the country can afford. I contrast that with the utter failure of the shadow Chancellor in recent months. He says that he is going to read the riot act to his shadow Cabinet colleagues to avoid their making further spending plans. The shadow Transport Secretary evidently did not hear that, because he went on to announce just recently that he was going to spend an extra £14 billion on building a new rail link from Scotland to London.
	Conservative Members do not like my mentioning this, but if one adds up Conservative spending plans and then takes account of their pledges to cut taxes, one sees that Conservative economic policies simply do not add up one little jot, whereas Labour's economic policies for the past 10 years, and going forward, not only added up but produced unparalleled prosperity, investment in public services and jobs.
	Finally, the right hon. Lady asked me about a debate on the national health service. I would be delighted to have such a debate any time. Part of that debate—
	Hon. Members: Announce one then!

Jack Straw: Part of that debate can be about the huge improvement in East Berkshire primary care trust in the right hon. Lady's constituency. She forgot to welcome the fact that yesterday there was a £38 million increase in spending for her PCT, announced as part of the £8 billion increase for the health service.

David Heath: May I also thank the Leader of the House for the innovation of announcing statements in advance?
	In the Budget statement, the Chancellor said:
	"Nearly 2 million people will see their income tax bills cut in half, and take home 90p of every pound they earn."—[ Official Report, 9 March 1999; Vol. 327, c. 188.]
	Of course, that was when he introduced the 10p rate in 1999. He has now removed it by sleight of hand. The right hon. Member for Witney (Mr. Cameron) did not notice, but we did. The effect is to increase higher marginal tax rates for the low paid, discourage work and increase in-work poverty. Following the Budget, can we have a debate on inequality, because inequality is increasing in this country, as the Young Foundation report on rural poverty—often hidden in this country—pointed out yet again? It is time that we had a debate on the effects of what the Chancellor is doing.
	May we also have a debate on the position of small businesses? The right hon. Member for Maidenhead (Mrs. May) mentioned small businesses, but did not refer to the fact that small businesses are facing a £900 million hike in corporation tax. Earlier, we heard the extraordinary, preposterous argument from the Secretary of State for Trade and Industry that that would somehow benefit small businesses, who would be delighted to pay £900 million more, because they might be able to claim some of it back in allowances. The increase will hurt small businesses in this country, and we should have a debate.
	Last week, I asked whether we could have a statement on the Lyons report. The Leader of the House said that that would be encapsulated in the Budget debate. However, the Budget statement did not mention council tax once. It mentioned the Lyons report, but only in respect of industrial property. Council tax is the tax that has the biggest impact on pensioners and those on fixed incomes up and down the country. After long cogitation, the Lyons report says that the answer to reforming council tax is to carry on with council tax. The only answer to council tax, however, is to scrap it. Can we have a debate on that?
	Lastly, can we have a debate on surveillance? The Leader of the House may have noticed the innovative plans by the Conservative-run Ealing borough council to put spy cameras in tin cans to catch people putting out wheelie bins early. Obviously, for Ealing borough council, beans means fines. May we have a debate on whether Big Brother is getting out of hand?

Tony Lloyd: I will do my best, Mr. Deputy Speaker.
	My right hon. Friend will have read the very serious stories about the stabbing to death of a young boy in the streets of London. He may also be aware that three people were killed in Greater Manchester in entirely separate incidents involving the use of knives. It is a fact that in our society the knife is probably the most dangerous weapon of choice when it comes to serious injury or death. May we have a serious debate about how we can begin to roll back this menace in our society, and how we can change the culture that dictates that the knife and the gun are acceptable and tell our young people that it is not necessary to carry knives to be safe and secure in our streets at night?

Jack Straw: Yes, I greatly welcome that. I also welcome an article in today's  Daily Mirror which contains information about two men from my constituency, Khadim Hussain and Ali Akbar Khan, who gave years of very brave service for the British forces in the last world war, as their fathers had in the first world war. Hundreds of thousands of people whom the BNP and their allies now wish to denigrate gave their lives to save this country from fascism. We all need to remember that.

Jack Straw: I do not think that what the hon. Gentleman says is necessarily correct, but in any event I refer to the answer I gave to his hon. Friend the Member for Shipley (Philip Davies). I know that my right hon. Friend the Secretary of State for Defence is anxious to do everything that he can to ensure that there is the maximum welfare, particularly for troops serving abroad.

Ann Coffey: The Mental Health Bill has completed its passage through the Lords, and that passage has not been uncontentious. It is due to return to the Commons for Second Reading. Will the Leader of the House ensure that the Bill is referred to a special Standing Committee so that written and oral evidence can be given to Committee members on the issues that were of concern to the Lords before the Bill passes on to the full Committee?

Robert Smith: As many people know, the North sea plays a vital role in our energy supplies of oil and gas and many jobs in north-east Scotland are linked to it, yet it is currently facing great difficulty in attracting investment because of rising costs and increasing difficulties in production. Will the Leader of the House ensure that during the debate on the Budget the Government explain why they have denied to the North sea the cut in corporation tax that large business on the mainland will receive, and why they have therefore not made the North sea more attractive to investors?

Jack Straw: The hon. Gentleman knows that the overall tax regime for oil exploration and lifting is a different one from that for corporations generally. My right hon. Friend the Chancellor made it clear yesterday that he had no plans to change the oil tax regime. The hon. Gentleman is right that there has been a decline in production from the North sea, which has been unexpectedly sharp, but there was buoyant revenue and production in recent years under the same tax regime, so he cannot suggest that the tax regime has been the cause of the decline.

Jim Sheridan: May we have a debate on the need to educate the British public on the dangers of exposure to asbestos? May I also draw to the attention of the Leader of the House early-day motion 1179?
	 [That this House welcomes the Mesothelioma Framework, launched on Action Mesothelioma Day, 27th February 2007, and urges the NHS to implement the guidelines in the Framework as soon as possible; regrets that 37 per cent. of the British public are unaware that exposure to asbestos can cause cancer and that 65 per cent. have never heard of mesothelioma; further regrets that bereaved families report that legal procedures followed by the coroner constitute a distressing chain of events at an extremely difficult time; and welcomes the recommendations contained in the British Lung Foundation's report An Unnatural Death for making this process more sympathetic to the relatives left behind.]
	It highlights that 37 per cent. of the British public are unaware that exposure to asbestos can cause cancer and that 65 per cent. have never heard of mesothelioma. We need a debate on the dangers of being exposed to asbestos, not only for workers but for their families, too. Anything that my right hon. Friend can do to educate the British public to stay away from asbestos unless they have protective equipment would be extremely welcome.

Jack Straw: A debate on this issue would be very important. I note that more people called "Mark" have been selected as Conservative candidates than have women.

Pete Wishart: This week has been the tale of two anniversaries. It is the 200th anniversary of the abolition of the slave trade, and we had a debate on slavery in this House, and there was a prime ministerial apology. It is also the fourth anniversary of the invasion of Iraq, but there was no prime ministerial apology and no debate in this House. When are we going to have such a debate in this House, led by the Prime Minister, in which comes to the Dispatch Box and say the three words that everybody wants to hear him say on the war in Iraq: "I am sorry."

Jack Straw: I commend my hon. Friend for his ingenuity. I would be very happy to see a debate on job sharing; indeed, there is every opportunity for him to raise these points during the Budget debate, bearing it in mind that we have made flexible working such an important aspect of our economic success.

Justine Greening: May we have a debate on the state of the youth justice system? This House has talked briefly about the tragic consequences of youth-on-youth crime in recent weeks, but the reality is that the youth justice system is creaking and unable to cope with the current number of young offenders. The secure estate for young offenders is full and contingency measures are being looked at. The community orders given to young offenders—two thirds of them will get such orders—are being routinely breached. Two thirds of drug rehab orders were breached last year, and 50 per cent. of intensive supervision and surveillance orders were breached. So may we have a serious debate in this House on the youth justice system, which is increasingly the gateway into the justice system for many offenders? I am convinced that as it stands, it is not set up to succeed.

George Osborne: I of course accept what the Leader of the House has just said about the absence of the Chancellor of the Exchequer. What is slightly more surprising is the absence of any Labour Members in large numbers to defend the Budget —[ Interruption. ] Well, I suppose that there are some here, but not really the quality.
	It does not take long for this Chancellor's Budgets to unravel, but even by his standards, this one was a record. It was presented to this House 24 hours ago as a tax-cutting Budget, but it took less than 24 minutes to work out that everything that he was giving with one hand he was taking back with the other. It is here in the Red Book—£8 billion given away by cutting the standard rate, and then £7 billion clawed back by abolishing the 10p rate, which he introduced, and £1 billion clawed back by the national insurance hike. This was not a tax cut: it was a con trick. The public have seen straight through it.
	The Chancellor said in his speech that he wanted
	"to ensure working families are better off".—[ Official Report, 21 March 2007; Vol. 458, c. 828.]
	But when the Institute for Fiscal Studies looked last night at the small print, it was clear that 3.5 million working families will be worse off as a result of this Budget. Which families? It is mainly the lowest paid. Pretty much anyone earning below £18,000 a year will see their income tax bills rise because of the abolition of the 10p rate, which more than cancels out the cut in the basic rate. That is a tax rise on the lowest paid and that lot over there cheered it.
	The Chancellor says, of course, "Don't worry, they get the money back in tax credits." Leave aside the sense of taking money in taxes from the wages of low-income families and then asking them to fill a form so that they can get it back, and leave aside the fact that only 60 per cent. of those eligible take up the working tax credit, because it is so complicated and poorly administered—there are still millions of low-income families who lose out. For a start, there are the ones without any children. For example, take a young couple who have not had kids yet, but are wondering how they will ever get on the housing ladder on their salaries. If they are each earning £13,000 a year, their income tax bill just got £224 higher. Then take two-earner couples on lower incomes with kids. Say one earns £7,500 part-time and the other earns £18,000 and they have one child. Even after tax credits, they will be £234 worse off —[ Interruption. ] Well, Labour MPs will have to put that on their leaflets at the next general election.

George Osborne: My right hon. and learned Friend returns to the familiar theme of Iraq, and perhaps we should save it for a later debate. However, he is right that people at home listening to the Chancellor must have assumed that they would be better off as a result of a tax-cutting Budget. What the Chancellor did not tell them was that it was a con trick—that the cut in the standard rate of income tax would be more than paid for by the removal of the 10p starting rate and the increase in the national insurance band. It was a classic stealthy trick.

George Osborne: Of course, Madam Deputy Speaker. From now on, I shall refer to the right hon. Member for Kirkcaldy and Cowdenbeath rather than to Gordon.
	There was not a word in the Budget speech about education reform, and nothing about public service reform or how the Chancellor will make sure that our tax money reaches the front line. The only mention of city academies in the entire Budget speech, despite the briefing to the newspapers, was the promise to remove VAT restrictions so that their facilities can be used by the community. It is a great idea. We proposed it, and the Chancellor has now accepted it.

Kerry McCarthy: Does not the hon. Gentleman accept that removing the VAT restriction on city academies will make a huge difference, because their facilities will be available to the community? Does he not welcome that significant move as something for which they have been lobbying for the past few years?

George Osborne: Of course I welcome it—the Leader of the Opposition proposed it.
	Yesterday, the Chancellor began his speech by comparing himself, with characteristic modesty, to William Gladstone, but he said that when he becomes Prime Minister, unlike Gladstone, he will not try to be his own Chancellor. He then spent the rest of his speech writing the Budgets for the rest of the Parliament. The income tax changes we have been discussing will not come into force until April 2008. The rise in national insurance and the top rate threshold will happen in April 2009. The inheritance tax changes take place in April 2010.
	The Chancellor has fixed the Budgets of his future Chancellors and given them their marching orders before he has even chosen who will do the job or before they turn up at the Treasury. Perhaps it will be the Education Secretary—who knows?—thrust into a job that the Prime Minister of the day will not let him do, no doubt exposed to death by a thousand cuts from the daily press briefings of the Brownite cabal. That may be the right hon. Gentleman's fate, but what the Budget tells us about the fate of the country is that the Chancellor will not change his ways. We shall have the same stealth, the same spin and the same con tricks. We shall have the same complete contempt for colleagues and belittling of Ministers that the Cabinet Secretary told us about. We shall have the same old-fashioned, top-down Stalinist control that is so out of tune with our times. With his last Budget, the Chancellor has shown us that he cannot be the change the country wants—that he is part of the problem, not part of the solution. One thing is clear from yesterday: if people want change and to restore trust in the political process, we do not just need a change of Prime Minister—we need a change of Government.

Alan Johnson: That was an entertaining speech from the hon. Member for Tatton (Mr. Osborne), but the public will be looking for the substance and experience that we heard yesterday, rather than the personal attacks and shallow self-regard that we have just heard. Even with all the expenditure on his public school education, the hon. Gentleman cannot even manage to be courteous about the Chancellor of the Exchequer. I have to remind Opposition Members that Comic Relief was last week. We also remember when the hon. Member for Tatton wrote all those wonderful jokes for the right hon. Member for Richmond, Yorks (Mr. Hague) when he was Leader of the Opposition. The trouble is that he also helped him with the policies—and we all saw what happened there.
	We have seen Conservative Back Benchers get over-excited before. We saw it before the 2001 and the 2005 general elections. If we compare the Budget speech yesterday with today's response, it seems to me that Conservative Members have learned nothing from their previous experiences.
	We had a Budget yesterday that concentrated on the environment, on science and innovation and on the issues of the 21st century, particularly the policies that we will need—including higher education, which I shall come on to soon—to maintain the economic stability that we have enjoyed over the last 10 years into the new century. Crucial to all that was, of course, education.

Alan Johnson: My hon. Friend is right. I believe she is talking about a tremendous visit to a primary school in her constituency. We found that there was special expertise in language teaching for primary school pupils, resulting in the teaching of Mandarin in that school. Incidentally, according to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), Mossbourne is the best school that he has ever seen, so I view that as a compliment to Labour party policies.
	We have improved results through a combination of additional investment and reforms. Compared to 1997, about 95,000 more 11-year-olds every year now reach the standard expected in English and maths. About 85,000 more pupils get five good GCSEs. When English and maths are included, 62,000 more pupils are making the grade. In 1997, there were 616 schools in which just a quarter of pupils obtained five or more good GCSEs; now, that figure is just 47, and we are determined to drive it down to zero.
	City academies have been a powerful force for good in the most deprived areas, bringing about improvements at three times the average, with twice the number of pupils on free school meals. By removing VAT constraints, the Budget provides further support as we move towards our target of 400 academies. Pupils across the nation are doing better, but with Every Child Matters in place, and with technology that is able to provide detailed information on each child's progression, we can move to the next stage and attack the pernicious link between a child's background and their educational attainment.

Alan Johnson: The hon. Gentleman is confusing two different things. First, Skills for Life is dealing with the failures of the previous Tory Government's education policy, and 1.25 million adults who were functionally illiterate and innumerate have now been given those necessary skills. Secondly, we are not cutting funding for adult education at all; we are increasing it. Sooner or later, the Conservatives are going to have to deal with policy. The issue in the 21st century is that we need to focus our resources on longer courses that will give people accredited level 2 and 3 qualifications to equip them for the world of work. That is our absolutely remorseless focus, and Lord Leitch's report agreed that it is the right priority.
	I was talking about breaking the link between background and educational attainment. Last year, we published a Green Paper with proposals to improve outcomes for children in care. The consultation has now ended, and we will come forward in due course with a series of measures radically to address the historic systemic failure that lets down the most vulnerable children in our society.

Alan Johnson: I accept what the hon. Lady is saying. I have heard this from several quarters. I will go back and look at the matter again, and I will deal with any individual problems that she wishes to raise with me. Time and again, we have said that the priority for the Learning and Skills Council must be people with disabilities and special educational needs. Reconfiguring adult education to focus on longer courses that result in qualifications must not interfere with the important work with children with special education needs. I will look into that issue.
	We reject the view that some children are destined to fail. All too often, bright and talented children simply do not get the support or help that they require. Early years education is vital to a child's progression, and we have invested more than £20 billion in that area. There are now almost 1.3 million child care places—double the number for 1997—and more than 1,100 Sure Start children's centres are providing support to almost 1 million families. With yesterday's settlement, we can guarantee 3,500 Sure Start children's centres—one in virtually every community across the country. We have given every three and four-year-old an entitlement to 12.5 hours free early learning, and 96 per cent. of children have taken that up. We will extend that to 15 hours by 2010.
	We do not believe that the benefits of a high-quality education should be restricted to a small elite. Our aim is for the state sector to match the levels of success in the independent sector, even without the harsh levels of selection in public schools. As the Chancellor confirmed yesterday, we are committed to closing the gap on capital funding with public schools by 2010, with a long-term aim to match spending per pupil.
	This is not just about finances, however. Our second aim is to ensure that state schools can provide children with the individual attention that they need. We are putting £1 billion into personalised learning this year alone, with much more to come. This will allow us to move forward on the Gilbert review, to ensure extra lessons and increased support for those who are struggling as well as for those with exceptional potential.
	Thirdly, we aim to emulate the extra-curricular activities available in private schools, and to provide the kind of sport, music, dance and drama activities that help children to develop confidence and to acquire valuable social skills. We are substantially increasing spending on sport and music. Extended schools offer children the chance to take part in these and other high-quality activities. There are 4,000 extended schools already offering wraparound services from 8 am through to 6 pm. By 2010, all schools will offer extended services.

Alan Johnson: We know the stance that the Conservatives took— [ Interruption. ] Just a second. Conservative Members should show some manners. I will give way in due course. They should not be so forward and impatient—[Hon. Members: "And pushy!"]—and even pushy. We know the stance the Conservatives took on higher education. One of the greatest economic, let alone educational challenges that we face is the need to invest in and expand our higher education sector.

Alan Johnson: The thrust of my argument is not that everything is perfect. Part of the— [ Interruption. ] I will come back to the point about NEETs in a second. Part of the argument that we are using is that, having come so far and laid the foundations—they were very expensive foundations to lay and they were never even remotely matched by the Conservative party—we can now move on to ensure that we close the attainment gap between children from more deprived backgrounds and children from more prosperous backgrounds.
	The number of NEETs has been around a stubborn 10 per cent. for the past 10 years. The number of youngsters in education and training has increased. That is clear. A combination of the introduction of the education maintenance allowance and higher attainment, which encourages youngsters to stay on in school, has led to something like a 5 per cent. increase in participation rates. It is also fair to say and worth pointing out that only 1 per cent. of youngsters who are NEET are not in education, employment or training in each of those years—16, 17 and 18. There is a hard core that we need to address and a lot is going into addressing that.
	My right hon. Friend the Chancellor announced yesterday another measure, costing £500,000, to offer youngsters who have dropped out of in-work training to bring them back into education. We have another, similar project going on in 10 local authority areas, to see what we can do to help those youngsters. Some of it is about gap years. Some of it is about the fact that they just want to take time out. A lot of it is about being disenchanted with education and having the ability to bring those young people back into the fold. It is an important problem. We are not saying that we have solved it, but our investment and our measures are capable of resolving it eventually.

Jim Sheridan: My right hon. Friend is absolutely right that lifting people out of poverty is the best route in terms of education and skills, but, unfortunately, when it comes to the whole question of apprenticeships we still have a male bastion. Will he do all that he can to encourage women to get involved in some of the education and skills schemes, not just to develop their own skills and lift themselves out of poverty, but to address the needs of the country?

Alan Johnson: My hon. Friend raises an important point, but I have good news. There is much more that we need to do, but 48 per cent. of apprentices are now women; 52 per cent. are men. We are getting close to parity. That is a long way from where we were before we undertook several initiatives, which he has been active in, to encourage more young women to come into apprenticeships.
	Let us talk about higher education. Variable tuition fees were one of the major policy reforms of recent years—an act of political courage by a Government who could so easily have ducked the issue. It taught us— [ Interruption. ]

Sarah Teather: The House might be relieved to hear that I will attempt to strike a slightly different tone from the opening speeches. I wish to concentrate on education and to deal with several aspects of that in some detail.
	I should say from the outset that I welcome many aspects of the Budget, some of which I will highlight in a moment. However, there were conspicuous absences from it and much lack of clarity. I always fail to understand why, when the Government have good tales to tell, they insist on over-selling their announcements. That is entirely counter-productive and it hands the Opposition a stick with which to beat them.
	Extra funding is a good thing and we all welcome it, so why cloud the issue by continuing the false spin of raising funding to private school levels? When the pledge was made last year, it was clearly fatuous and intended not to track increases in private school funding, but to be an aspiration of raising funding to 2006 levels for private schools. Even with that narrower definition, at a forecast growth rate of 2.5 per cent. in real terms, the Institute for Fiscal Studies estimates that we would not get there until 2020. Every child in education at the moment will have left education by that stage, even under the Secretary of State's proposals in the Green Paper for young people to stay on beyond the age of 16, so the pledge is entirely irrelevant for any child in school today.
	We heard pre-Budget hype about heavy spending on education. The Department for Education and Skills has indeed been one of the greatest beneficiaries of this year's Budget. However, the claim of increasing funding as a proportion of gross domestic product is rather undermined by the fact that the year-on-year percentage increase is less than the projected economic growth. The shadow Chancellor referred to that point at the outset of his speech. The average rate of economic growth cited in the Budget is 2.75 per cent. over the course of the comprehensive spending review period, so, in fact, there is a shrinkage. I do not understand the contradictions in the Red Book, so I hope that the Financial Secretary will give me an explanation when he makes his winding-up speech.
	Let me welcome the commitment in principle that has been outlined today to raise the education leaving age. Unfortunately, the Department's rather chaotic withdrawal and replacement of the Green Paper this morning meant that none of us received it in time to go through it in any detail. However, we have made it clear from the outset that we broadly support the initiative. As the Secretary of State said, whether it succeeds will depend on not the strength of the carrots or sticks—or bribes or threats—but whether the proposal includes genuine educational opportunities that are tailored to meet the needs of each individual young person. The success will also depend on how transparent the choices are.
	We have one of the worst post-16 staying-on rates in the western world. That matters to the economy and for social justice. Some of the most disadvantaged young people miss out on the opportunities that education offers, and such a lack of education has lifelong impacts on a person's earning potential, life choices and life chances. Sixteen is a critical point. Ninety per cent. of those who stay on in education and do A-levels go to university, but the route back into education is a great deal more difficult for those who opt out.
	Making the proposal work will depend on much more than enticing 16-year-olds to stay on. It will also depend on changes much further back in the system. Many young people mentally leave school at 14 or 15 and no carrot or stick will re-engage them. The curriculum is key to keeping such young people interested.
	The Secretary of State referred in detail to diplomas as a means for achieving success. However, he has warned of the risk of these diplomas being seen as the secondary modern qualification. That is why I remain disappointed that the Government have not done as Tomlinson recommended and gone the whole hog by scrapping GCSEs and A-levels and introducing a new, modern, British diploma that would be recognised by all and would allow young people to mix academic and vocational learning.
	The Secretary of State referred in his speech to the pernicious link between achievement and background. John Smith's commission for social justice pointed to Tomlinson's recommendations as being the key way to break the link with class structure in education and ensure that all young people have the chance to perform. I am disappointed that the Secretary of State has not taken that on board and delivered Tomlinson in full.
	A few moments ago, the Secretary of State replied to my hon. Friends the Members for Rochdale (Paul Rowen) and for Cambridge (David Howarth) by citing figures for capital and revenue. The amount cited for revenue was £700 million, but I am still not clear whether that is the amount for each year, or the total spend between now and 2013 or 2015. What does the Secretary of State mean by the £200 million for capital? When will that be delivered? We know that there have been great delays in getting building projects in place under the Building Schools for the Future programme. If we do not start this project now, by the time we change the learning leaving age, we will not have the capacity to deal with the many more young people who will be staying in education. I would be grateful if the Secretary of State wrote to me about that in detail and, perhaps, placed in the Library an answer setting out exactly what he means by the funding, what he proposes to spend it on, and when it will begin.
	When the Secretary of State produced his estimates of costs, did he take account of the fact that vocational courses tend to be a good deal more expensive to deliver than others? It is likely that the young people who are not staying on at the moment will be undertaking more vocational courses. What is the rationale for keeping the educational maintenance allowance at the age of 17? It is not clear why the allowance would be kept in the system when it becomes compulsory to stay on beyond the age of 16.
	There are several practical steps that the Government should take to make 16-to-18 learning work better. First, they could narrow the gap in funding between colleges and schools, although such a measure was conspicuous by its absence from the Budget. Secondly, they could move 16-to-19 funding from the Learning and Skills Council to local authorities. We could then have some hope of devising a system under which funding would follow the student. The White Paper on further education, published with last year's Budget, promised that a technical funding group would come up with a new funding system. Where is it? Has it finished the job yet, and may we see the new system, please?
	It is a long time until 2015, but many young people have already dropped out of the system and need attention now. The training wage for teenagers not in education, employment or training—NEET—is a step in the right direction, but it has been an awfully long time coming. The Government have presided over a 44 per cent. increase in the number of 16 and 17-year-olds in that group. There are 124,000 16 to 17-year-olds in the NEET group, and the pledge offers help for 50,000 of them. How will that help be targeted, and who will be selected for help? In particular, what does the Secretary of State for Education and Skills propose to do about the disproportionate number of teenagers from Pakistani and Bangladeshi backgrounds in that group? The number doubled between 2004 and 2006, and that must surely be of considerable concern. What research has been done on why those teenagers are failed by the system, and how will the pledge be targeted to help them?
	The announcement on apprenticeships was much harder to unpick. I am not clear what is meant by "doing more" to double the number of apprenticeships to 500,000. The number of young people on apprenticeships has risen from 165,000 to 188,000 in the past five years. At that rate, it will take another 40 years to meet the target. What exactly is the Secretary of State proposing to do differently to ensure that we reach the target more quickly? I am sure that the personalised learning money will be welcomed by all, but we know that the children with the most severe difficulties need a trained teacher to achieve improvements. It is critical that the money is spent in a way that works. Putting a child with an adult for half a day a week will not work for all children.
	Ofsted's report on the foundation stage pointed out that speaking and listening skills were holding back many young children from progressing. No details about that are attached to the proposals for personalised learning. Does the Secretary of State intend to extend that programme? The money for ChildLine and for listening services is very worthy, but will he clarify how much money will be provided? The National Society for the Prevention of Cruelty to Children is not clear about how much money is being given, and for how long it will be available. I hope that the Government's commitment signals a shift towards focusing on the problem of bullying in schools. The Government have poured a great deal of money into initiatives to tackle truancy, but we know that a third of children who truant say that they do so out of fear of bullying. Tackling the problem at source would save a great deal of money and result in a good deal more education being provided.
	I have some further queries. Will the Financial Secretary clarify the pledge on VAT for academies? Does it refer to sports facilities, as was said in the statement, or to buildings, as the Red Book says? I hope that it refers to buildings, because the critical problem for many voluntary sector organisations in most areas is a lack of places to meet. If all academy buildings were opened up to the community, it would make a significant difference, but why have academies been singled out in that regard? Sixth-form colleges are caught in exactly the same trap; they, too, have halls and meeting spaces that could be opened up to the community. Will the Secretary of State consider asking the Chancellor for VAT relief for sixth form colleges, too?
	Academies were a conspicuous absence from the Budget. Where is the money to meet the Prime Minister's pledge of 400 academies by 2010? The Secretary of State referred to the pledge again, so it appears that it has not been dropped, but I cannot tell where the money needed to meet the pledge will come from. Is it coming from the total pot for education, or is there specific funding of which we cannot find mention in the Red Book? If the money is to come from the whole education pot, the pledge on per-pupil funding is a bit meaningless, because the funding will obviously be concentrated in very small pockets.
	Specialist teachers are also conspicuously absent from the Budget. Last year's Budget contained a pledge to increase the number of science teachers by 3,000; where are they? The only mention that I could find of recruitment of science teachers related to the review that the Prime Minister has commissioned from Lord Sainsbury of Turville, but no details have been given on that point. Where is the extra money for recruiting foreign language teachers, so that the recommendations made in the Dearing report just this month can be met? There are some welcome initiatives in the Budget, but it has been spoilt by over-hype, and there are many conspicuous absences. I hope that, in his winding-up speech, the Financial Secretary can clarify some of the rather obscure aspects of the Budget.

Keith Vaz: I do not. The hon. Gentleman has a great deal of knowledge as a shadow Health Minister, so he knows much more about the economics of those issues than I do. We are meeting our targets, and the people who come to us are exceptions. Mr. Golding was the first case with which I have dealt in the past year of a constituent who is concerned about the delay—we would know if there were other such urgent cases, because people would contact their MPs—so matters are progressing, which I welcome. The money has gone to front-line services, and it has improved our targets, which is to the benefit of our constituents, but of course it is important that we look at the way in which services are delivered locally by officials.
	I agree that there are too many managers in our local health service, which is why I welcome the meeting that I held last Thursday with Tim Rideout, the new chief executive of Leicester PCT, who told me that a tier of management will be removed in Leicester, so even more money will be spent on local services. Mistakes have been made. One PCT would be sufficient in a city such as Leicester, so goodness knows why we had to have two. Such decisions must be looked at very carefully indeed, as we are dealing with public money, but I am pleased with the large investment in the health service in Leicester. The Under-Secretary of State for Education and Skills, my hon. Friend the Member for Gloucester (Mr. Dhanda), is in the Chamber, so I hope that he will tell his colleagues how pleased we were to receive a visit from the Minister for Schools. Sadly, when he came to Leicester to meet the leader of the Liberal Democrat council, I could not attend, because it was a mid-week visit, but he looked at Judgemeadow community college, which will be completely rebuilt, and St. Paul's—not that St. Paul's, but another one in Leicester—which is a Catholic school that the Minister opened and has received public funding to build a new performing arts centre. Our schools are going to rebuilt, as a result of the largest investment by any Government in education in Leicester. Some £230 million is going into the local education system, which we should welcome enormously. The Opposition chant, "Where has the money gone?", and it has gone on local services, to improve them and provide benefits for our constituents, which is why they are happy with what the Government have done, and why they elected them three times in a row with large majorities.
	May I turn to Britain's position in the world and the way in which the Budget helps us to build on our achievements in Europe? I am glad that the Chief Secretary to the Treasury is in the Chamber, because he has performed many excellent ministerial roles in the past 10 years, including negotiating with our European partners. Tomorrow is the seventh anniversary of the adoption of the Lisbon agenda. I had the privilege of serving as Minister for Europe at the time, and I saw the way in which the Prime Minister negotiated a set of benchmarks for the European economy, if I may put it like that. For the first time ever at a European summit, we had a set of benchmarks against which the European economies would be measured, to see whether they were successful. It was not the usual warm words that are spoken European summits, where everything is wonderful and everyone is happy with everything that Europe has done. Those benchmarks were revisited two years ago on the fifth anniversary of the Lisbon agenda—the Kok report, too, looked at the success of European economies after Lisbon—so we can determine how well we have done against the Lisbon criteria. There has been growth of 25 per cent. in the past eight years and, moreover, we are the fourth-best performing economy on criteria in the Lisbon agenda. We are the best of the big European economies, and that is because of the Government's policies. If we want to turn the European Union into the most dynamic and knowledge-based economy in the world, and if the competition is the United States, as it always is, we can see that the benchmarks set at Lisbon have made an extremely important contribution to what our Chancellor and the Treasury team have achieved in trying to move the agenda forward. That agenda has not only provided a strong economy, but has created jobs.
	There was a great deal of concern among Opposition Members about the arrival of our fellow citizens from eastern Europe when the A8 joined a few years ago. They voiced criticism and, in fact, the then Leader of the Opposition, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), was going to go to Luton airport to judge how many EU citizens were coming to work in this country. Enlargement, however, has been an enormous success, and the Government, the Prime Minister and the Chancellor have led the process of enlargement. The combination of enlargement and the Lisbon agenda means that the citizens of the A8 who have come to the UK have produced huge benefits for our economy. Their taxes have benefited the economy, and their hard work and dedication have helped us to keep our place, which is why the Germans and the French must regret very much failing to do what we did two years ago, when we allowed the A8 citizens unfettered access to the UK.
	I was disappointed that on 1 January this year we did not extend that unfettered access to the Romanians and Bulgarians, as I believed that allow such access would further help the economy and make it even stronger. However, a review has been promised by the Home Secretary, and I hope that my right hon. Friend the Chief Secretary to the Treasury, who knows those reports and the statistics, will tell him that the enlargement of the European Union and our success on the Lisbon agenda have provided a huge boost to our economy.

Peter Lilley: Does the right hon. Gentleman accept that even if there are the advantages in labour market terms that he suggests from the employment of the huge influx from the eastern European countries, it must also have had an effect on the housing market? Would he like to speculate how many houses are required to house 600,000 people?

Keith Vaz: I know that the right hon. Gentleman poses those questions sincerely. I have had no evidence at my surgeries or any anecdotal evidence at meetings that the A8 citizens are putting pressure on our housing market. He may have evidence, but I have none. If they contribute through their taxes to the British economy, they are entitled. The right hon. Gentleman is a former Secretary of State for Social Security. Very few of the A8 citizens have claimed benefits. The Minister, I know, will have the figures at his fingertips. A tiny proportion—145 was the last figure that I heard—of the hundreds of thousands who have come into the country have claimed benefits. If they come to the UK, pay their taxes, are not exploited and are paid the minimum wage, that is how they contribute to the economy, and it is up to local authorities to make up the difference. Any Member who represents an inner-city area knows that that is the case. That has been the magnet for people to come to this country.
	I shall make two final points. The first concerns the GE factory in my constituency, which is about to close with the loss of 287 jobs, despite the booming economy. I have had meetings with the Minister for Industry and the Regions about that. The factory has been in existence for over 60 years, and was originally owned by Thorn. It used to make the majority of the light bulbs for the whole of Europe—the lights in Europe started in Rushy Mead in Leicester—first for Thorn and then for General Electric, the second largest company in the world. GE has decided to close the factory, against my wishes, against the wishes of local people and against the wishes of the council.
	Sadly, the Budget—the reduction in corporation tax, which I welcome, and the reduction in personal income tax, which I mentioned—comes too late for the factory and the work force. As I was pressed by the hon. Member for Wycombe (Mr. Goodman), I am happy to clarify that that will be the lowest level of tax for 75 years. I am happy to put that on the record, before he jumps up at the end of the debate and starts accusing me of a lack of knowledge of economics. Although I did economics at A-level, I plead guilty to the error and I am happy to put the record straight.
	I wish the factory could have remained open. My constituents have worked in Rushy Mead all their lives and now they have no jobs to go to. That is the problem with globalisation, which the Chancellor is good at talking about because of his visits to China and India. He has spoken about globalisation and the need to make our economy competitive. The GE jobs are going initially go Hungary and eventually to China, so we need to find a way of retraining our people so that they get they skills that they need.
	Finally, I am glad the right hon. Member for Hitchin and Harpenden (Mr. Lilley) is present, as I have some nice things to say about him. Sixteen years ago the Bank of Credit and Commerce International closed, on 5 July 1991. I have raised with the Treasury, and it may well be in the Red Book, which I have not yet seen, the issue of BCCI and how helpful the right hon. Gentleman was to me and to those who lost their deposits, their homes and their jobs 16 years ago. He was the best Secretary of State to have dealt with the matter over the past 16 years.
	How sad it is that after 16 years BCCI is still in liquidation, with the liquidators still bleeding the bank, or what is left of it, with their huge fees. How sad it is that a Labour Government, after 10 years, have not put sufficient pressure from the Treasury and the Department of Trade and Industry on the Insolvency Service, which is part of Government, to put pressure on the liquidators to close the liquidation. If my right hon. Friend the Chief Secretary or the Financial Secretary gives the Governor of the Bank of England a ring about BCCI, he will hear how sad and how angry the Governor is about the fact that the Treasury still has not sorted the matter out. He and former Governors have had to go to court because the liquidators sued the Bank of England and have had to settle out of court.
	I should like to hear in the winding-up speech whether the liquidators have paid the costs of the case over to the Bank of England. I want to ask the Chief Secretary—I know he is not the Minister with responsibility for banking—to say to the Minister with responsibility for banking, "Yet another Budget where we must have made provision for BCCI, yet no solution. Why is it that all the senior partners of Touche Ross over 16 years have dealt with the matter and have all become multimillionaires, and still there is money in the bank that has not been paid out?"
	I was very nice to the former Secretary of State, the right hon. Member for Hitchin and Harpenden, but it was a Conservative Government who closed BCCI with the words of the then Prime Minister and the then Chancellor of the Exchequer, Lord Lamont, that there was no money in the bank. That was what he said when he was Chancellor. Only 80 per cent. of the money has now been paid back. Please, under this Government, let us do the decent thing and close the liquidation. The Treasury must talk to the DTI to try to resolve the matter.
	Those final points were my only mild criticism, not of the Budget, which is a splendid Budget, but of the way in which we are progressing these matters. The Budget will be warmly welcomed in Leicester, East and the people of my constituency want to thank the Chancellor for what he has done.

Michael Jack: I am grateful to be called to speak in the debate. I remind the House of my declaration in the Register of Members' Interests. I shall comment on the Budget and the Government's record of stewardship of Treasury matters. I shall say something about tax simplification, inflation and monetary policy, and I shall conclude with some observations on inheritance tax and the environmental element in the Budget.
	The Budget was difficult to judge because part of the picture was missing—that is, the now receding outcome of the comprehensive spending review, originally scheduled for this summer, and now forecast in detail for the autumn. Until we can put the tax raising and spending parts of the economy together, it is difficult to know how good the claims of the Chancellor were yesterday. We know that effectively there will be a squeeze on public expenditure, and if the Government will not pay for certain services, individuals may have to provide those themselves. That, from their standpoint, would be the equivalent of a further tax.
	The Chancellor was also silent on one tax rise that we know is definitely coming and which will arrive from 1 April—the likely 5 per cent. increase in council tax across the United Kingdom. Many hard-working families will see a real departure of money from their balance before any of the changes announced by the Chancellor can affect their personal budgets. This has been the silent tax throughout the time the Labour Government have been in power, in that above-inflation increases in council tax have happened year in, year out. Not just hard pressed families, but many pensioners are struggling to pay their council tax. And they will have had little relief from the telephone directory-size Lyons report.
	There was another element missing from the Red Book. I hope the Financial Secretary will give some thought to remedying that in future. Over the Chancellor's period in office, there have been many, many changes to the tax system, but no evaluation is ever provided as to whether they have produced any net benefit to the economy. For example, the Government have spent over £1.5 billion on reliefs to the British film industry. When I tabled parliamentary questions asking for some kind of evaluation, I was referred to the film industry's own reports on its overall progress. We have no indication from the Treasury of how many starts on new British films have occurred as a result of the umpteen tax changes that have affected the film industry. With £1.5 billion of taxpayers' money put into one industry alone, I should have thought that some kind of assessment should be available.
	I remember a small tax change some years ago whereby the rate of VAT on children's car seats was reduced, with the claim that that would somehow improve children's safety. I applaud that aim, but where was the evaluation of whether the expenditure of £5 million of the public's money ever gave us anything by way of improved safety?
	A more controversial area is the ending of the payable tax credit as regards pension provision—a major change during this Chancellor's stewardship of Treasury matters that was initially a £5 billion reduction in the amount of money going into pension funds. There has been much debate and argument about it. I, for one, would be interested to see a Treasury appraisal of that major change in the way in which pensions are funded, but nothing has appeared. If I had time, I could go through nearly every tax change that the Chancellor has made, for which there has been no impact study or evaluation to find out whether it worked.
	Yesterday, the Chancellor patted himself on the back in relation to his own perception of his economic stewardship. Before we consider his latest Budget, we should reflect for a moment on his track record. Personal tax allowances—much has been said about the personal tax content in this Budget—have, by and large, been increased by the rate of price increases, not earnings. As a result, the Chancellor has accumulated the equivalent of another 7p in the pound in tax take—an increase in revenue equivalent to £29 billion during his lifetime as Chancellor. That fiscal drift has also meant that another 1.5 million people are now in a higher-rate tax bracket. I acknowledge that economic growth and increasing earnings account for part of that, but an awful lot of it has to do with fiscal drag. As for the tax bill for households, in 1997 the average household spend was 33.6 per cent. of income; now, it is 38.3 per cent.
	One can go on looking at other areas. For example, while house prices have doubled, stamp duty thresholds, with the exception of the lower band, have not changed. The revenue in that area has increased by a staggering 582 per cent. In terms of investment in the economy, the percentage of gross domestic product invested in pensions when this Government came to power was 6 per cent.; now, it is significantly lower. The savings ratio has fallen from 10 per cent. to 5.3 per cent. Total debt in the economy is up by 160 per cent., at £1.3 trillion. Public spending as a share of GDP has, over the lifetime of the Government, increased from 34.7 per cent. to 44.9 per cent.—an increase of 7.5 per cent. In the United States, our economic rival, public expenditure has increased by 2.4 per cent.; in Germany, the figure is 1.7 per cent. The cost to business of compliance with the multiplicity of the Chancellor's tax changes since 1997 is estimated by the British Chambers of Commerce at an additional £40 billion.
	Looking at Government debt, in 2001 the Chancellor announced that debt over the next five-year period was to be £28 billion; by 2006, that had risen by an additional £129 billion—a £101 billion overspend. Now this Budget, by contrast with the situation that was announced in the pre-Budget report for borrowing, contains a further £8 billion. I would say to the Financial Secretary that Treasury forecasting is very much in need of a review as regards its accuracy. If we go back through the Red Books, we see an increasing difference between what was promised and what was delivered, particularly on the key measure of Government borrowing.
	Having given a different perspective on the Chancellor's tax record, I turn to some specific issues. Let me first acknowledge the activities of one person who was not mentioned in the Chancellor's plaudits yesterday—the Paymaster General, who is continuing to provide support for the tax law rewrite exercise. That started during my time in the Treasury, and I am pleased that the Government have continued it over the past 10 years. The Treasury has also introduced some important anti-avoidance measures whereby those who wish to avoid tax must get Treasury approval in the first instance.
	Against that more open and transparent operation of the tax system, may I say to the Paymaster General, through the Financial Secretary, that perhaps the time has come to start learning some of the lessons that have come out of the tax law rewrite exercise? I have been involved in its steering committee for the past 10 years. Many good ideas about sensible reforms in the operation of the tax system have come out of that exercise, but sadly its remit does not allow those measures to be implemented because they would require a change in tax law.

Michael Jack: I am grateful for the hon. Gentleman's observations. We do not necessarily need another commission, but the rewrite exercise's remit needs to be expanded to take account of his thought process by allowing for the expertise of the tax industry, which has been devoted selflessly and tirelessly to the rewriting of our tax law in plain English. The lessons that have come out of that should be developed, in partnership with the Treasury and Her Majesty's Revenue and Customs, into an exercise to improve and simplify the operation of our tax system without putting revenue raising at risk.
	For 70 or 80 per cent. of the population, what they pay every month in their mortgage has a more profound effect on their financial well-being than a penny or two off the basic rate of tax. On the basis of the average mortgage—£123,000, according to the Council of Mortgage Lenders—a quarter of a point change in the Bank of England's base rate would cost people £25 a month or £300 a year extra. That has a far more profound importance as regards their personal budgets than the relatively small changes in the tax system that were discussed yesterday. That puts particular emphasis on the continuing importance of monetary policy.
	I have been worried for some time that the United Kingdom may be running unnecessarily high interest rates because of structural problems in our economy. I asked the Library to provide me with a comparison between average prices, GDP growth rates and interest rates in the UK and the United States over the period 1998 to 2006. In the UK, interest rates were 5 per cent., price changes based on the consumer prices index were 2.9 per cent., and growth was 3.1 per cent. In the United States, interest rates were 3.64 per cent., price changes were slightly below, at 2.9 per cent., and growth was 3.5 per cent. I conclude from that that this other open, free market economy has some advantage allowing it to run lower interest rates than we can, and we should explore why. A recent International Monetary Fund report clearly identified the difference between the inflation rate in the manufacturing and service sectors:
	"While goods price inflation has generally been below service price inflation in all three"—
	the euro area, the United States and the United Kingdom—
	"in the United Kingdom, this has been significantly more pronounced with goods price deflation offsetting strong and fairly stable inflation in services prices".
	There is a case for examining whether further structural reform is needed in the economy, particularly in the service sector, to ensure that it is efficient and not unnecessarily driving inflation in this country. That was borne out in the same IMF report in relation to labour productivity growth in tradeables—as it calls the manufacturing sector—in the United Kingdom between 1995 and 2004. A 2.93 per cent. change is quoted, with a 1.4 per cent. increase in productivity for non-tradeables. In the United States, however, the figures are 3.5 per cent. versus 1.99 per cent. That needs to be looked at, and I hope that the Financial Secretary will agree that a consideration of the structural side of the economy has some merits.
	In previous speeches on the Budget, I have commented on the subject of inheritance tax. Originally, I advocated its abolition, but I recognise that anyone who says that a tax should be abolished must tell the Government, or the Opposition, of the day where the money will come from. Given that more estates are now being drawn into inheritance tax, I decided that an alternative approach was merited. Older people who want to pass on the fruits of their labour have a considerable worry that house price inflation will draw them into the complex web of inheritance tax, with its 40 per cent. marginal rate. There is now a case to re-examine that tax.
	I posed to the Library of the House the following question. If the inheritance tax threshold remained where it is now, and if all inheritance tax exemptions were removed, what rate of inheritance tax would be necessary to maintain the current yield? The answer that came back was a marginal rate of 10 per cent. If we modified that proposition by continuing the exemption from inheritance tax for the surviving spouse, a rate of 12.5 per cent. would result. With a simpler, more straightforward inheritance tax with low marginal rates, we might not have the situation in which avoidance was the privilege of the rich and sophisticated. That analysis shows that there is a case for re-examining the way in which inheritance tax operates.
	From the same analysis, I also discovered that if we removed ways of avoiding inheritance tax, and had a threshold of £750,000, we would still be left with a 40 per cent. marginal rate. We can play tunes with the inheritance tax system, and the time is now right for a thorough review to remove complexity and try to introduce a lower marginal rate.
	I want to conclude my remarks on the environmental element of the Budget. As the Minister will know, I chair the Environment, Food and Rural Affairs Committee, which has been doing considerable work on the citizen's involvement in climate change and on bioenergy.
	The way in which the Budget dealt with some environmental challenges was disappointing, although it would be churlish not to put on record my appreciation of the £50 million to be spent on preserving rain forests, which I wholly applaud. I also applaud the extra £6 million for the low-carbon buildings programme. A time will come, however, when grant subsidy by the Government will not be sufficient for the introduction to the United Kingdom of alternative, sustainable ways, with low greenhouse gas emissions, of generating heat and electric power. I recommend to the Financial Secretary that the energy review include some analysis of adopting the system in Germany, where the buy-in tariff on self-generated electricity provides a return to the individual of four times the price paid for purchasing electricity centrally, which has dramatically increased the amount of power generated by renewables sources to 10 per cent., at no cost to the German Government and with no grants. The better buy-back price guaranteed for a period of 20 years, with the cost spread out among all electricity users, means that the average German household spends only €2 extra on their electricity bills, while still delivering a 10 per cent. renewable rate. Neither this country's renewables obligation certificate, nor Ofgem's proposals for consultation on the removal or replacement of the current ROC system, replicate the German success, which has led to widespread localised electricity generation through photovoltaic cells, wind or combined heat and power.
	Communities in this country are anxious to get involved in reducing greenhouse gas emissions. Again, Germany provides substantial examples of local investment by local people in combined heat and power schemes, thus removing the burden from Government but ensuring that the community has the right conditions to fund effectively their own environmental programmes. Will the Financial Secretary consider a third way in the range of individual savings accounts provided to encourage personal and private investment in energy-saving projects? Either personal involvement in an ISA dedicated to that purpose or changing the operation of venture capital taxation to encourage more investment in localised schemes, coupled with improved buy-back prices for electricity, could radically transform the opportunities for localised power and heat generation.
	The Financial Secretary should also consider the derogation on duty for biofuels. When the price of oil went up, the numbers wishing to invest in biofuels production substantially increased. It has become clear during the Select Committee's inquiry, however, that some producers reduce production as the price of oil decreases, as it is no longer profitable, and the duty derogation does not provide an effective subsidy to cover the additional costs. Is it not possible to vary that subsidy according to the price of hydrocarbon fuel, so that the amount of money going back to a biofuel producer when the price is $80 or $90 a barrel is considerably more than when the price decreases to $50 or less? Take-up of the Government's help to the second-generation biofuels industry needs further encouragement if we are to sort out the food-fuel paradox, because such investment is slower in this country than in continental Europe.
	I am surprised that those on both Front Benches have shown so little imagination in regard to aviation emissions. They could have come up with better ways of drawing to passengers' attention the carbon implications of their journeys. I would favour not a tax but a carbon offset scheme, enabling people to know how much carbon their journeys were costing. Some of the work of the CarbonNeutral Company, for instance, could help to identify the carbon cost of journeys. Most important, the money raised could be put in a pot and help to fund carbon dioxide-reducing activity. Perhaps there could be a special lottery fund for localised and community-based activity, or a fund to give further support to projects such as the low carbon buildings programme.
	BP has developed a carbon offset programme allowing motorists to offset with money the carbon in the fuel that they buy. The company tells me that the results of its customer survey convey the clear message that customers want the money to be spent locally rather than remotely. The time has come for more imaginative offset programmes. It must be made clear to people that the money they must pay as a consequence of their carbon expenditure can be spent on reducing carbon in their areas and communities.
	Budgets are like Chinese meals. This Budget is certainly like that. You noticed it on the day, but you woke up the following day wondering what it really was that you ate. I know from my time as a Treasury Minister that this will turn out to be rather a disappointing Budget. The cheers on Budget day collapsed very quickly as people saw the true meaning of the so-called 2p off tax. What it really means is a tax take from the less well off: a reduction in payable tax credit. Disappointment will be inevitable, and the forthcoming attraction is a public expenditure round that will squeeze the amount available for the provision of Britain's vital and valuable services.
	In the light of the observations of the shadow Chancellor, my hon. Friend the Member for Tatton (Mr. Osborne), I look forward to a real change of tenure at both No. 10 and No. 11 Downing street.

Helen Jones: It is a pleasure to follow the right hon. Member for Fylde (Mr. Jack), who always has something interesting to say in debates such as this—although both he and I often find ourselves addressing a half-empty Chamber on Thursdays.
	I shall concentrate on the education implications of the Budget. My right hon. Friend the Chancellor made it clear that we would continue to invest in education, and my right hon. Friend the Secretary of State for Education and Skills described some of the effects of that this afternoon. It is a policy that the Government have espoused throughout their term in office, and their investment has produced spectacular results. Standards of literacy and numeracy have risen dramatically in our primary schools, and the key stage 3 strategy is improving results in secondary schools. More young people are obtaining five good GCSEs than ever before, and we ought to recognise and celebrate their achievements, because they are too often denigrated when the results are published. There are many hard-working young people who are achieving very good results.
	Nevertheless, as we all know, underachievement and inequality remain in the system. The Select Committee on Education and Skills has drawn attention to that in a number of reports. The way in which we tackle inequalities is crucial to education spending. There is still too wide a gap between our best schools and the schools that are struggling. It has been a scandal for many years that young people can leave school at 16 and be given no further education or training, and it was good to hear the Secretary of State commenting on how we propose to tackle that in the future.
	It is also true that a young person's chances of proceeding to higher education are still overwhelmingly determined by the social class into which he or she is born. That inequity must give Ministers sleepless nights, but the social and economic consequences are also potentially catastrophic. We know—and we heard again this afternoon—that the number of unskilled jobs in the economy is set to decline, and that the number requiring higher-level skills will rise. If we do not tackle educational low achievement and underachievement, there is a risk that a section of our society will not be able to obtain jobs and that the gap between the haves and the have-nots will increase, with consequent damage to civic society. That is how high the stakes are in respect of education, because what is at stake is the kind of society that we produce, not only in economic terms but in a host of other areas as well.
	The Government have taken steps to tackle underachievement. There have been valuable initiatives such as those to do with children's centres and extended schools, but many such initiatives attempt to tackle the problem through making changes to the structures of the school system, and I have concerns about how well that works, because I think that the jury is still out on a number of them. First, there is doubt about how well some of the initiatives gel with what the Government are trying to do in other areas—making schools the focus of their community, for example, or having extended schools. There is also an issue to do with dynamic leadership, which we talk about often in terms of education. That is important, but unless such dynamic leadership feeds through to improvements in teaching and learning—unless it is embedded in the system—when the leader moves on, the school might decline again. We should focus our education spending much more on developing the curriculum and improving teacher training. Those are the keys to improving education.
	The results of some of the initiatives that have been taken are difficult to interpret at this stage—and the evidence is sometimes contradictory. Ofsted has so far inspected only nine academies. My hon. Friend the Member for Hackney, South and Shoreditch (Meg Hillier) talked about Mossbourne community academy, and the more I have read about it the more it has become clear that it is a very good school—in fact, I learned more this afternoon about education in Hackney than I have for a long time. Of the nine academies inspected, overall effectiveness was judged to be good in three, satisfactory in five and inadequate in one. That shows that the performance of academies differs; some are very good, while others have not achieved good results. It is too early to say how this programme will work through.

Greg Mulholland: Although we agree that there are some positive spending measures in the Budget, does the hon. Lady not also agree that it contains nothing that suggests that the Government will reach their target of having 400 academies—that is the new target, which is double the original 200 figure?

Helen Jones: The Government's target is to get good schools, which is the right target. Parents want a good local school—whatever title we give it. That is why I want to focus on teaching and learning.
	Some academies are very good, but the intake of some academies is very different from that of their predecessor school. That is a plus in one sense, but it also makes it extremely difficult to compare results because we are not comparing like with like. Some academies have a very high expulsion rate—much higher than that of the local authority in which it is situated. If difficult and challenging children are moving to other schools in the system, that also makes comparing results difficult, because the challenges presented by such children are not tackled, but moved somewhere else.
	There has also been the specialist schools programme. The Education and Skills Committee—and that Committee in its previous incarnation as the Education Committee—has made it clear that there are varying assessments of that programme. It is undoubtedly true that many specialist schools have improved their results and that they have offered further opportunities to many children, but let us look at last year's results. The average point score at GCSE in specialist schools increased by 10.5 per cent. but it increased throughout the secondary school maintained sector by 10.8 per cent. It is therefore very difficult to draw conclusions from those results at these early stages.
	It sounds confusing, but education can be confusing, because it is very difficult to establish control groups when starting new things. To make matters more confusing, in some areas certain things have worked and Government interventions have been very successful. For example, in 1997-98 45.9 per cent. of schools in the most deprived wards were in special measures; by 2004-05, that figure had fallen to 28.8 per cent. Primary schools with the highest number of children on free school meals—a good rough index of deprivation—had narrowed the results gap on schools with a smaller proportion of children on free school meals.

Helen Jones: I agree with my hon. Friend, and that is a very important point. What seems to have worked in the primary schools that I am referring to is a combination of rigorous focus on the curriculum—including literacy and numeracy—better support for teachers, better materials and better overall support. However, it is important to recognise that, although good management of a school is important in itself, we must ensure that it feeds through into improvements in teaching in the classroom. Ofsted's report on academies found that although leadership is a strength for most academies, that has as yet led to minimal improvements in teaching in the classroom.
	If we are going to tackle this problem, our education spending must in future focus on the curriculum, teaching and improving teacher training. Alongside that is the question of how we get our best and brightest teachers into our most challenging schools. The biggest single indicator of low educational achievement in this country is not ethnicity or gender, but poverty: the simple question of whether a child is born poor. Of course, that does not mean that all poor children are destined to fail—some schools prove triumphantly that that is not so—but it is more likely to happen.
	So in making our spending decisions, the first question that we need to ask is, what do we do about the curriculum? What do our children need to flourish in the 21st century? The problems that they will face are quite different from the ones that we have had to face. They are growing up in a world of vast movements of people. They will indeed be global citizens, and many of them will work abroad at some time in their lives. Families are scattered and communities often fragmented; schools have a role to play in dealing with that. Most of all, our children are growing up in an age of mountains of information: in a multi-media age in which, at the touch of a button, the internet can provide information—some good, some bad—on every subject under the sun. Unless we teach them to deal with that information overload, we will not be preparing them adequately for the world in which they will grow up.
	I accept that we in this country are not good at talking about the schools curriculum. We tend to assume that we know what everyone should learn, and usually, it is what we ourselves learned. As a result, our curriculum is still based on a 19th-century curriculum. It has been tweaked here and there and bits have been added and subtracted, but it is recognisable as the same curriculum. That is not good enough for the 21st century. We need to ask much closer questions about what our children learn. If we all accept, as I assume we do, that the building blocks of the curriculum are literacy and numeracy, because they are the foundation of all other learning, we have to ask, "What next?" I wish to make a few suggestions. They are not prescriptive or even a full list, but they are suggestions that we should debate—

Helen Jones: I will try to do so, Madam Deputy Speaker. My argument is that our money should be spent on developing the curriculum and on training teachers to deliver it. That is the key to improving teaching and learning.
	I suggest, for example, that our children should first learn about their own country, its history, traditions and culture. That is easy to say, but it takes a lot of thought and spending to develop that curriculum. If there are two historians in a room, they will have three different views on how to deliver the history curriculum. English teachers will argue for a long time about what children should be reading.
	I suggest that we need to be guided by two points. First, we need to prepare our children for work, but the second is that we also need to prepare them to live. Education is about living well, and the decisions that we make about the curriculum, and the money that we put into it, should be guided by the desire to ensure that our children have access to the best. We should educate them for leisure, as well as for work.
	Secondly, children need to learn about at least one other culture. Culture is accessed through language, and we have heard the comments on Lord Dearing's report on the teaching of languages in primary schools. What he said was largely correct, but it still raises questions about how the money can be provided for developing the materials that will be needed to teach languages in primary schools and to train teachers to deliver that curriculum.
	There is also a question about which languages should be taught. Traditionally in this country most people have learned French or German at school. If we are to move to teaching other languages, it will have major implications for public policy and finance, in developing the staff to deliver them. It is right that we should do so, but long-term financial decisions have to be made about how to spend our money.
	The third point is about science education. The Secretary of State said in his opening remarks that we are now getting more maths and physics teachers into our schools and more people are taking those subjects at university. But it is vital that children leave school with some basic scientific literacy—an understanding of scientific methods and of how science has shaped our world.
	Children also need to leave school with certain skills. When the Education and Skills Committee considered citizenship education, for example, it found that we need to encourage active citizenship in our young people. They need to learn how to take responsibility and about the need to take part in their community. We need to consider whether all young people should undertake some community service as part of their progress towards leaving school. Perhaps an over-arching leaving certificate should include some such service—

Helen Jones: The hon. Gentleman makes a fair and reasonable point, if we want to produce rounded citizens, but the question is how we direct our public spending to free up teachers to carry out such projects. Long-term decisions need to be taken. We need special people to deliver that. We need teachers who can inspire young people, and access the support that they need for learning. That is much more difficult than it ever used to be. We live in an age of internet chatrooms: everyone's opinion is considered to be equally valid, regardless of their knowledge of the subject, so it is very difficult to inspire respect for learning.
	The Select Committee looked at various subjects, and we found time and again that there were deficiencies in teacher training—for instance, in respect of identifying special needs, or in teaching citizenship or reading. Yesterday, the Chancellor announced that there was going to be much more funding for one-to-one tuition. The changes in personalised learning will mean that we need to look carefully at how we train teachers in the future.
	The demands of personalised learning, and the classroom changes that will follow as a result, will require much higher levels of skills in planning, assessment and classroom management. We need to look very closely at the curriculum that trainee teachers undertake, and take account of the need for continuing professional development.
	For example, there are real questions about whether one year's postgraduate training is enough. If we decide that it is not, there will be major implications for where we direct our investment in higher education. If we choose not to put money into higher education directly, we must answer questions about how we ensure that teachers get continuing professional development. For example, should teachers be required to do compulsory continuing professional development units? If so, how do we finance that?
	Another problem has to do with how we secure investment in the most challenging schools located in our most deprived areas, and how we make sure that they get the best teachers. Some of the teachers who work in the most challenging circumstances are inspiring and dedicated, but they are the minority. My suggestion for how public finances should be used may not be universally welcomed, but it is that we should be looking to train an elite corps of teachers for our most challenging schools.
	I believe that we should recruit the best and brightest graduates. We should support them while they are in training, and also put in the funding needed to ensure that they are supported when they are at work. If we want them to stay in those difficult schools for some time, they should be given further mentoring and extra support at work, and further training as they proceed. Those teachers should become the best in the profession: they should be recruited by competitive entry, and fast-tracked for promotion. We should pay them more, and demand better results from them.
	At the moment, the pay structure means that teachers prefer to work in nice schools with well motivated children. That is just human nature, and only exceptional people choose to work in difficult and challenging schools. We should refocus our public finances on those areas where we need to make progress.
	Such long-term decisions about where we should put money are difficult, but they will have to be made. As we move to personalise the curriculum so that young people are able to make different choices, we will also have to consider ways to ensure that young people must attain minimum entitlements, at a speed that suits them. There are fine judgments to be made about education spending, but what is clear is that we are making them in an atmosphere of rising spending and better provision; we are no longer in the era of cutbacks. When I was teaching, two or three children had to share a textbook. Now, the finances are available and we can make decisions. The consequences if we do not will be serious both for our economy and for our society as a whole.

Michael Fallon: I remind the House of my interest that is recorded in the register.
	My right hon. Friend the Member for Fylde (Mr. Jack) has already told the House that a Budget cheered on the day quickly loses its shine. However, I cannot recall a Budget that has disintegrated quite as rapidly as this one. The Chancellor's speech yesterday, which I understand was a record in terms of time, was itself a guide. He seemed quite unaware of the fact that after the speech anybody outside the House could go on to the web, turn up pages 208-09 of the Red Book and discover that, although they were being offered a tax cut next year of £8 billion, £7 billion and other bits and pieces would be taken away from them. It is a strange Chancellor who does not understand that our constituents, who are already faced with an increase in air passenger duty, who will be faced in October with significant increases in fuel duty, and who will be faced this year and next year with council tax increases in the order of 5 per cent., will not suddenly fall over in gratitude at a reduction of merely 2p.
	There are a number of tables in the Red Book, and if the Chancellor is to claim the credit for cutting tax for a significant number of people, it would have been more honest if he had published in the Red Book the table that is now beginning to emerge, and shown exactly who the winners and losers in that exercise would be. Given that the Financial Secretary is going to the trouble of making our statistics service more independent, perhaps the new statistics board could undertake to ensure that the Red Book at next year's Budget is accompanied by a proper independent assessment of who the winners and losers are by category, so that the Chancellor will be unable to throw up smoke and mirrors in the immediate aftermath of the Budget.

Michael Fallon: I did not, but the BBC's economics editor made that point in a BBC broadcast in which I participated, because he was searching for the information at the time. It is extraordinary that economic commentators, our research teams and the Library will all have to spend the next two or three days discovering information already held in the Treasury about who the winners and losers are. It looks as though single people will be losers from the changes announced yesterday. Young, professional single people—perhaps working in the public services—may find that they are worse off, not better off, as a result of what was announced yesterday.
	I want to consider the economic position in respect of the public finances. The Chancellor did not quite have time in his speech to apologise for the fact that he has yet again overestimated the amount of tax revenue that he was supposed to gather in. I think that this is the sixth year running when he has wrongly forecast the tax revenues on the wrong side. As a result, the deficit is widening and he will have to borrow more than he originally forecast. The public finances have worsened.
	In the private sector, the economic stability about which the Chancellor boasts depends very much on who one is. The stable economic framework that he claims to have created is not particularly attractive to a potential first-time buyer, struggling for a foothold on the housing ladder, or to a pensioner, struggling to make ends meet on a fixed income and confronted with retail prices inflation which is much higher for the pensioner community than the 2 per cent. figure the Chancellor talks about.
	We have a very lop-sided economy now, in which home owners—those already on the housing ladder—enjoy year-by-year huge rises in their capital assets, while those outside the housing market find life harder and harder. I would suggest to my hon. Friend the Member for Wycombe (Mr. Goodman), who is participating in our work on policy formation, that we need to look again at the housing market and perhaps find new ways of helping young couples. If we do not, home ownership will slowly and steadily become predominated by the wealthy and the middle aged.
	Secondly, we need to do more to protect pensioners from council tax increases that well exceed the money that they are paid through various fixed incomes. At the moment, the Chancellor tries to protect them by one-off measures—pre-election bribes—that are introduced one year, then withdrawn the next. We need to look again at our council tax system. An increase of 5 per cent. in one year may be sustainable, but year after year, for a pensioner on a fixed income facing high utility costs, it is a very serious matter indeed.
	I would like to deal now with the tax burden, and the element that I particularly want to concentrate on is the business tax burden. The Library tells me that of all the taxes garnered in 2005-06, business taxes account for some 27 per cent. of the total burden. I have to say that a corporation tax rate of even 28 per cent. still looks very high compared to our Organisation for Economic Co-operation and Development competitors. We are now slipping into the bottom half of that table, as we see other competitor countries—sometimes neighbouring countries such as Ireland—with much more attractive rates.
	My right hon. Friend the Member for Wokingham (Mr. Redwood) mentioned yesterday that we are seeing the slow but regular movement of multinational headquarters away from London. As I understand it, there are no statistical tables available yet to provide the evidence, but there is a worrying trickle of members of the Institute of Chartered Accountants and the CBI reporting in their surveys that firms with headquarters in London are now assessing every couple of years whether they should retain their headquarters here in London. HSBC, for example, conducts such an assessment every two years. In 1993, the answer was a categorical yes—London was the place to do business. Now, it is reported, the answer is much less clear cut. That is extremely important, because 1993 was the year in which HSBC chose to move to London. It could have chosen elsewhere. That is a reminder that, if we are to continue to attract and retain in London the headquarters of these larger companies, we need to get the tax and regulatory regimes right.

Michael Fallon: I certainly agree with that. We all, across the House and across government, ought to be more aware of just how mobile company headquarters are. We hear people in the City talking rather grandly about the City of London being like Wimbledon, in that we put on the best tournament in the world and all the foreign banks and companies want to come and play here. However, the analogy that I would commend to the House is that of Silverstone. We do not have to have a grand prix in this country. If it becomes too expensive, Mr. Ecclestone can move it somewhere else. There are plenty of other people who want to put on a grand prix. The hon. Gentleman's point is extremely well made: if the burden of tax or the regulatory framework enveloping some of these successful financial services companies becomes too great, London could lose them.
	I want to make several points about the spending side of the Budget. The first relates to the curious claim that the Chancellor repeated yesterday—he has probably inserted it into almost every Budget speech that I have heard him make—that he has abolished boom and bust in the economy. So far as the private economy is concerned, we will be able to test that claim only when the present house price boom finally runs out of steam. The Chancellor has, however, created boom and bust in the public economy, through the way in which he has organised public spending.
	At first, public spending was tight, then we had the splurge, and now it looks as though it is going to be tight again. Indeed, having studied the detail of the numbers that were announced yesterday, I am worried not only that it will be tight but that there will be a sudden change that will affect some of the smaller spending programmes as well as some of the long-term programmes that are vulnerable to sudden changes because of the way in which they are planned and organised. Research spending at the universities is one example, as is the work of the British Library and the British Museum. I understand that both those organisations have been asked to consider illustrative cuts—cuts, not freezes—of 5, 10 or 15 per cent. in their budgets as part of the work leading up to the spending review in the autumn. It is those smaller essential longer-term programmes that need protection from this sudden feast and famine in our public spending.
	My second point relates to the NHS. As others have already noted, we did not hear an awful lot about the NHS yesterday. It is my view that the NHS is still in turmoil. We have seen the extraordinary upheaval in manpower planning, with a number of young doctors now struggling to find positions. We have also seen endlessly overlapping reorganisation at every level of the health service, and we are now seeing very real job cuts in some of the non-medical professions.
	I should like to give the House an example. Well over a year ago, the community hospitals in my constituency were being reviewed by the former South-West Kent primary care trust. The review, involving all the staff and services at those hospitals, has now been continued and widened by the new West Kent primary care trust that took up its role in October. That review, which will determine how many and what kind of services should be provided by the community hospitals, will itself be overtaken by the more general fit-for-purpose exercise being conducted by the strategic health authorities. The result is that staff are demoralised and the future of the Sevenoaks and Edenbridge hospitals still swings in the balance.
	Furthermore, the Government have still failed to decide on the key issue of resource accounting for the trusts' deficits. All three of the trusts that serve my constituency—the West Kent primary care trust, the Maidstone and Tunbridge Wells NHS Trust and the Dartford, Gravesham and Swanley primary care trust—have been struggling with deficits. Because of the way in which resource accounting has been applied, they must balance their books each year, but if they fail to clear the historic deficit, its effect is doubled in the subsequent year. As a result, trusts up and down the country are scrambling to make last-minute economies. In fact, the Maidstone and Tunbridge Wells NHS Trust wrote to all its staff inviting them to work a day unpaid to help to clear the deficit.
	The Audit Commission reported last July that the resource accounting rules were simply incompatible with the way in which NHS spending has been conducted, yet there has been no decision, either in the Budget or from Health Ministers, on whether that will be corrected in time and the NHS will be released from those obligations from the beginning of the new financial year—1 April. If the Financial Secretary to the Treasury has time, I would be grateful to hear whether resource accounting is to be abandoned for the NHS trusts in time for the new financial year. The way in which it is being applied now seems to be extraordinarily arbitrary and is undermining the staff and public support that the trusts need if they are to serve their public.
	As for jobs in the NHS, in 20 years as a Member of Parliament I have never seen job cuts on the scale that we are now seeing across our local NHS. Physiotherapists coming out of training who were promised jobs are now being denied them and have to consider alternative careers. Health visitors are being told that their services are no longer required, and midwives are being made redundant. In all those professions the number of posts is being reduced. Those people decided to go into the public service, but now their career aspirations are being shattered. If the Government were going to cut NHS jobs on such a scale, they should have been more honest at the start.
	Finally on the spending side is the voluntary sector. It ought to have been encouraged to come forward in support of the state, but the sector is now crippled by new legislation of all kinds and the excessive application of regulations on money laundering and criminal records, which are worth while in other fields but which are now applied to the very smallest, most local charity that is never likely to have been involved in money laundering or anything like it. In addition, grants to voluntary sector organisations are beginning to be cut.
	Let me give the House the example of Dorton college of further education, which is one of the few institutions in this country that serves blind and visually impaired people. It has been told that its work retraining funding grant of £250,000 a year is to be halved; as a result, fewer blind people will be able to attend the college from next September. That sort of yo-yo public funding for voluntary organisations and charities working in support of the state is no way to organise public spending.
	The tax cut with which the Chancellor somewhat theatrically ended his Budget statement yesterday may well have fooled some of the City commentators, forecasters and analysts who were supposed to have predicted what he would do, but it certainly has not fooled my constituents and I believe that, when the time comes, it will not have fooled the country.

Richard Spring: If we look back on the past 10 years, we see that the Chancellor has consistently said that the economic situation is unparalleled in our history. If we look at actual performance, however, we see the truth—that the growth rate has been approximately 2.8 per cent. If we look beyond that to the post-war rates, we see an average increase of 2.5 per cent. The performance over the past 10 years has been achieved in what is generally accepted as having been one of the most benign economic environments and world conditions imaginable.
	The idea that there has suddenly been a step change in the economic growth performance under this chancellorship in the last 10 years is simply not a sustainable argument. We should remind ourselves that, when the Chancellor came into office in 1997, the International Monetary Fund described the situation as a golden economic scenario. In one of the biographies of the Chancellor it is alleged that, when it was pointed out to him what a fantastic inheritance he had, he said something along the lines of, "Am I expected to write a thank-you note?" The difference is this. Many of the essential reforms that were vital to secure greater economic stability and better British economic performance, such as trade union reform, reform of the closed shop, dramatic cuts in personal taxation, privatisation and the big bang, were opposed by the Labour party—totally incorrectly at the time.
	As we look back over the last few years, we can see that much of the feel-good factor has been generated by rising house prices. As we heard the other day from the former Governor of the Bank of England, much of that arose because of concerns about a recession. The way in which the Bank of England reacted was to ensure that there would be a greater housing boom, despite the potential consequences.
	Looking beyond the figures that were produced in the Budget report, one of the key indicators of economic success is the improvement in living standards. Figures from the Office for National Statistics tell us that the average weekly gross income per household in 2001-02 was £600. It rose, in real terms, to £616 last year—a compounded growth rate of just 0.5 per cent. The real weekly disposable income per household rose in real terms by only 0.35 per cent. per year. So, for all the headline growth rate increases, the net effect in terms of household incomes tells a different story.

Richard Spring: I accept that there has been a growth in employment. That is true in almost all industrialised countries. However, in fairness to the hon. Gentleman, if he looks at the pattern in the last year, he will see that it has begun to reverse itself quite dramatically, compared with other major industrialised countries.
	If we look at the difference in household incomes between the richest 20 per cent. and the poorest 20 per cent. in 1997 and today, we can see that it is 10 times. The amount is identical. There has been no change. According to the same Office for National Statistics data, the lowest-income households are paying a higher share of tax and receiving a lower share of benefits than they were in 1997.
	That has come about at a time of a massive increase in public expenditure. That expenditure has not, of course, resulted in a transformation of public services. That is at the heart of the criticism of what the governance of this country has been all about. People are asking, "Where has all the money gone?" The truth is that the Chancellor has not taken anything like the tough and radical decisions of his predecessors, which were often controversial and sometimes, indeed, divisive. The Chancellor has poured money into the public sector and has swollen public sector employment, but without effective prioritisation and consultation to achieve measurable better outcomes. I am afraid that, as we now know, that is coming to an end, because the rate of growth in public expenditure is going to be less than the rate of growth in the economy overall. Of course, the Chancellor had no alternative but to do that, so the bonanza in public expenditure is about to end without the reforms that were necessary to produce a massive increase in the quality of our public services.
	I suggest that there have been three main factors behind the economic growth that has occurred under the Chancellor. I have touched on the massive increase in public expenditure. We have also seen the trebling of house prices, so this is growth led by consumption. Household debt in 1997 was 100 per cent. of disposable income, but it is now more than 160 per cent., and the figure is rising. There has also been a substantial increase in the population of this country.
	Productivity has not matched economic performance to the extent that it should have done. We are suffering the highest current account deficit in our entire history, with a third of that figure being filled by our service industries. We are hugely and increasingly dependent on our financial services sector. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) pointed out, however attractive London has been as a centre for the financial services industry, the mobility of that sector is much greater than that of manufacturing, so we must watch with great concern the burden of taxation and regulation.
	Productivity was considered to be one of the most demanding issues for the Chancellor when he assumed office, but our productivity is less than that of France, Germany and the United States, partly because of the huge expansion of the public sector. Indeed, one in four of the new jobs that have been created in this country have been in the public sector, and our tax burden has risen appreciably under this chancellorship—it is certainly higher than that in the United States, Germany and Japan. Much of our lack of performance on productivity has come about because of poor performance in the public sector. The International Monetary Fund describes what the Chancellor has done as the
	"most aggressive fiscal expansion of any G7 country".
	The heart of the problem is that expenditure on the public sector has cost the taxpayer a staggering amount, yet the functional mismanagement in the public sector has, at times, been absolutely grotesque—we only have to look at the mismanagement of our health service and the financial difficulties that have resulted to realise that. If one is the guardian of the public purse, one is entitled to invite Cabinet Ministers with departmental responsibilities to ensure that the management of such huge sums is appropriate.
	Let me relate my experience during my time as a Member of Parliament. When I was first elected in 1992, we had the West Suffolk health authority. We were then told that we needed a pan-Suffolk health authority. More latterly, we were told that economies of scale and management were not the important thing and that we needed the management of health to be close to communities. We thus got five primary care trusts, which became three primary care trusts, and now we are back to having a Suffolk-wide health authority all over again. The cost of that has been grotesque and the events have ill served the people who depend on the health service.

Kevan Jones: I agree with the hon. Gentleman about the fiddling around with health authorities. In Durham, for example, we went from having one area health authority to having seven, yet now we are back to where we started. However, does he not agree that that has gone on under previous Governments, although that does not excuse what has happened? Perhaps we have tried to change the management of the health service in the expectation that that will deliver results. Rather than concentrating of delivering front-line services, management changes have been put in place.

Richard Spring: I am glad that the hon. Gentleman accepts that errors have occurred. I dare say that management has never been perfect in the health service. However, the changes of the past few years have been extremely dysfunctional. The difference is that the salaries paid to the senior people who run health services are equivalent to those of Cabinet Ministers and the Prime Minister. The cost of the massive managerial overheads, the salaries and the consultancies has been a damp hand on the provision of good and decent health care. We see the problems now: there are the problems faced by our junior doctors, the sacking of nurses, and the closure of wards and everything that goes with that. The chief executive of the NHS recently said that
	"some of the policies that we have implemented had not been properly costed. That is absolutely true."
	The Public Accounts Committee talked about the "weak control" of finances. As we know, there is a shortage of midwives, and junior doctors, to whom I have just referred, have been protesting. Huge deficits have grown up in the NHS, despite the massive increases in funding that the Chancellor has made in our health service, and that situation will continue for at least another year.
	At the heart of the problem is disgraceful managerial dysfunction. The Chancellor is the guardian of our finances, but a lack of consultation and prioritisation has resulted in our wholly wasting, in many respects, the huge sums that have been given to the NHS. That is an increasingly common view among our constituents. Where, indeed, has the money gone?
	I should like to draw the Financial Secretary's attention to another point: one of the most bizarre aspects of yesterday's Budget was the treatment of small businesses. When he gets back to his office, he should expect a huge volume of letters and e-mails, sent to the Treasury by business people in the smaller and medium-sized business sector who simply cannot believe that taxation for the sector has gone up, as was announced yesterday. I draw his attention, as my hon. Friend the Member for Tatton (Mr. Osborne) did, to the fact that there has been a series of changes in taxation in the sector since 1997, with rates of tax going back and forth. In 2005, small business tax rates were 20 per cent. First-year capital allowances were then introduced, and now the small business tax rate has gone up to 22 per cent.
	Although it is true that the headline rate of corporation tax has gone down from 30 to 28 per cent., smaller companies that have profits of up to £300,000 will see taxation rise from 19 to 22 per cent. Of the £985 million that the Treasury is expected to reclaim from the corporation tax system, no less than £820 million will come from small businesses. That will help to offset the corporation tax reduction for larger firms. If we consider the pressures on small companies, which include local taxation and the business rate, we see that 10,000 local shops have closed since 1997. Corporation tax, despite the new rate announced yesterday, is now higher than when the Chancellor came to office in 1997.
	The capital allowances in the Budget are allegedly an offset against the higher level of taxation, but the truth is that many of our acorn, smaller and most dynamic businesses do not have high capital expenditure. They are in the creative industries and in the knowledge-based economy that we keep hearing about. They will not be beneficiaries of those allowances. It is astonishing for a Chancellor who talks about the need for entrepreneurial activity, and to encourage new business investment and new start-ups, to increase taxation as he has done. I hope that we can get a satisfactory explanation from the Financial Secretary, but I cannot imagine what it might be.

Richard Spring: I am afraid that the Chancellor's Budgets are always rather mysterious and arcane, and it takes great armies of accountants, tax advisers and lawyers to establish what he means. My hon. Friend will agree that there is outrage in the smaller business community at what happened yesterday, and an explanation from the Government is urgently required.
	May I turn to the question of energy security and the taxation of North sea oil? The Financial Secretary dealt with the subject in an Adjournment debate, and I have read the Treasury discussion paper. It is a hugely important matter, and the reaction to the Budget demonstrates that there is genuine concern about the declining base in the North sea. The Chancellor has spoken at length about the vulnerability of our energy security in an era of geo-political instability. Natural hazards, too, are a difficulty, as well as the technical problems that arise in this area. UK domestic fuel sources have been depleted, and we are moving inexorably from being a net exporter to being a net importer. Objectively considered, some countries that supply our energy are not among the most stable in the world. The capacity for production is at the upper limit—the oil supply from OPEC is often at full capacity—so any hint of instability in the middle east means a sharp rise in prices. Indeed, the middle east accounts for 65 per cent. of the world's oil reserve, and in periods of instability we have seen the consequences for oil and energy prices, and have experienced the impact in the UK on prices, inflation and the consumer. The issue is therefore hugely important, given the nature of the world and, indeed, terrorist activity.
	We are very much beholden in Europe to Russian supplies, particularly natural for gas. Many people have asserted that Russia will exploit its ability to supply Europe with energy, and use its influence to make political decisions about that supply. There have been instances of such behaviour in the past 12 months in eastern Europe, and the director of the strategic studies centre at the Russian Academy of Sciences said:
	"What has changed is that Russia has begun using energy as a political tool".
	That is important from Britain's point of view. The pattern of production in the UK demonstrates that there are huge questions about the future viability of production in the North sea. Oil and gas remain vital to the UK for the foreseeable future, and account for 75 per cent. of the UK's primary energy supplies. The UK oil and gas industry has spent more than £370 billion—all of it private capital—to recover the nation's offshore hydrocarbon reserves, and it has generated huge sums of money for the Treasury, so it is in everyone's interests, not only geopolitically but economically, that production is sustained and encouraged.
	We remain a significant oil and gas producer, but the United Kingdom Offshore Operators Association has repeatedly said—indeed, it stressed this after the Budget—that high-cost inflation, combined with typically small opportunities and increased tax rates make it harder to attract investment into the North sea. Margins are shrinking, and some of the fields are becoming quite old. In neighbouring countries such as Norway, a different, more competitive tax regime has emerged.
	Yes, the oil and gas industry is an important contributor to our economic life and to the Treasury coffers. It is hugely important for our geopolitical stability, but the real shock, if there was one, in the Budget presentation was the decline in revenues from North sea oil. There is one thing that I do not understand, and I hope the Financial Secretary will be able to explain it to the House. The Government have known for some time the pattern that is emerging. The current situation is one thing; looking down the track the situation is extremely serious for us, yet what we have is yet another discussion paper. All the right questions may be there and it is a complicated tax matter, but urgent action is required. It is a matter of great disappointment that all we get is more talk on the subject. I hope the Treasury will be provoked into taking sharper action.
	In conclusion, we have seen a massive increase in public expenditure, which is beginning to tail off. Parallel with that there has been a huge increase in the monstrous bureaucracy in the public services. It affects the morale of teachers, the numbers who wish to retire early, and the turn-over of young teachers who come into the profession wanting to teach but are twisted up in form-filling and bureaucracy. There are only a small number of police officers on patrol at any given time, and they all say that they are caught up in a web of bureaucratic interference by Government that makes their jobs impossible. I have touched on the situation in the health services.
	We must understand that unless we get a grip on the environment of regulation and interference overtaking our country, which the Chancellor has allowed to happen, however much money we pour into the public services, we will not get a commensurate improvement. That is the Government's legacy—a huge increase in taxation to the highest levels ever, a massive increase in public expenditure, and public services that have not improved remotely as much as they should have.

Kevan Jones: It is a pleasure to follow the hon. Member for West Suffolk (Mr. Spring), but I think he lives in a parallel world—a different world from many of my constituents, who have benefited over the past 10 years from the stable economy that we have become proud of in this country. I joined the Labour party in the dark days of the early 1980s, and I well remember people writing pamphlets about the unelectability of the Labour party. One of the key issues on which they did not trust the Labour party was the management of the economy.
	How things have changed over those 20-odd years! Not only have we proved that we are able to run the economy and invest in public services, which we can rightly be proud of, but we are leading, as the hon. Member for Sevenoaks (Mr. Fallon) said, in an increasingly competitive and changing world, from which we cannot insulate ourselves, no matter what anybody in any political party says. It is no good turning our backs and hoping that emerging international markets will go away if we do not believe they are there.
	Levels of national debt are down to record levels. According to the Chancellor's statement, national debt is down to 38 per cent., compared with the euro zone, where it is 50 per cent., the USA where it is 44 per cent. or the staggering height of debt in the great dynamic economy of Japan, where it is 92 per cent. We ought to be proud also of the levels of capital investment that the Government have made, which is up from £18 billion in 1997 to over £43 billion now.
	In his opening remarks today, the hon. Member for Tatton (Mr. Osborne), who entered the House, as I did, in 2001, said in response to a question that the past 10 years had been worse than the 10 years before 1997. Again, the hon. Gentleman seems to live in a universe parallel to the one where I and many of my constituents live. It is worth remembering those years, when we had inflation of more than 10 per cent., interest rates that hit a record 15 per cent., and unemployment of 3 million-plus. That had a dramatic effect in constituencies such as mine. The economic heart of many of those communities was ripped out overnight, with no protection or investment afterwards. Now, house prices are rising, but we do not have the cancer of negative equity, which affected 1.5 million people.
	Another achievement since 1997 is the fact that net borrowing, which had hit a record of more than 8 per cent., is now predicted, as the Chancellor said yesterday, to be down to 2.7 per cent. and, in future years, 1.4 per cent. Borrowing is not intrinsically bad—it is a question of what is done with the money that is borrowed. The important thing is that we are no longer borrowing to invest in unemployment.
	The Government can be rightly proud of the record levels of employment, with more than 2.6 million extra jobs—a record in the G7 countries. Reference has been made to quality of life. Having a job is a basic thing in most people's lives. It gives one dignity and a reason to get up in the morning—what I always call a place in the world.

Kevan Jones: There are a record number of jobs in the economy. There is a hard core that we have to tackle; I have it in my constituency. It will take time and effort to get to people who have been written off and consigned to incapacity benefit, for example. I agree with the hon. Member for Sevenoaks that that is a challenge that we cannot ignore. In an ever-developing world, it is important to get record levels of employment higher and to ensure that we get the most out of the individuals in our economy.
	Youth unemployment used to be a scourge in many areas. My constituency is not an inner-city constituency; I have often described it as a rural constituency with urban problems. It has pockets of high deprivation in former mining communities whose economic reason for existence has gone. Since 1997, youth unemployment in my constituency is down by more than 90 per cent.—I will return to the issue of 16 and 17-year-olds who are out of education and unemployed, which was tackled in the Budget—and long-term unemployment is down by more than 65 per cent.
	The Government have achieved that not by waving a magic wand but by trying to reward work. The Budget increased the working tax credit threshold by £1,200. I welcome that. The gloom and doom merchants complain about how the tax credits system has been administered. The Paymaster General, who is on the Front Bench at the moment, knows that I have not been uncritical of the way in which her Department has administered the system, causing hardship to some of my constituents. However, we should look at the bigger picture and think about the support that it has given to many families in my constituency, where it is making a real difference.
	This Labour Government must be proud of the national minimum wage. During the 1997 general election, when I was a trade union official, the Conservatives told us that it would create mass unemployment and be bad for the economy. It has done exactly the opposite. It has helped to raise people out of poverty and removed the absolute disgrace, in a decent society, of people working for £1.50 an hour or less. There was the famous occasion when a security guard at a jobcentre was being paid £1.50 an hour and had to bring their own dog to guard the premises. We have a proud record on employment, which we should not stop championing.
	Is everything perfect? No, it is not, and the test for the Government now is to help those in every constituency, including mine, who have been on long-term incapacity benefit and need assistance to get into work. The change since 1997 is that jobcentres are not trying to get people into any job, at any cost, just to manipulate the figures downwards. For example, Stanley jobcentre in my constituency has dedicated workers who advise clients and support people, who often have serious health issues, into work. There are those who say that people are being forced into work who should not be, but it is good for a lot of those people to access work and to gain the place in the world to which I have referred.
	Yesterday's Budget also reflected our proud record on pensions and pensioners. It is repeatedly pointed out to me that those pensioners who were the poorest in 1997 are now better off than they have ever been, certainly in my constituency. For example, Annie Bell from Waldridge, who unfortunately died last year at 85 years of age, had campaigned for a free bus pass all her life. When we announced the free bus pass for pensioners, she said to me, "Kevan, this will change my life." More importantly, because she was on a basic state pension and had no savings, she had never been better off. At her funeral, her daughter said that the last few years of her life had been changed by the fact that she was not scrimping and saving and suffering poverty in old age.
	There are some, however, who have worked hard throughout their lives to have small occupational pensions and are then hammered by income tax. I am therefore glad that the increase in the income tax threshold was announced yesterday. The announcement that, from April 2011, those over 65 years of age will pay no tax on income under £10,000 will also be welcomed.
	We should also be proud of the protection that we have offered to those hard-working people who have paid into pension schemes and lost their pensions through no fault of their own. That is a credit to the campaigning work of my hon. Friend the Member for Cardiff, West (Kevin Brennan), now sitting in silence as a Whip on the Front Bench, who highlighted the issue when he was a Back Bencher. The extension of the financial assistance scheme yesterday from £2 billion to £8 billion will support those who have lost their pensions through no fault of their own. I listened to someone say on television last night that that was not good enough. Well, it is a damn sight better than we have had in the past, and the Government have recognised the injustice done to those people. That and the Pension Protection Fund will provide a safety net that will rightly protect such people from poverty in old age.
	On health, the hon. Member for West Suffolk asked where all the money had gone, as though some great black hole or vacuum were sucking it all in. I shall tell him where it has gone in my constituency, which I accept is very different from his. When I was elected in 2001, it was a disgrace that the Chester-le-Street district hospital was a former workhouse, over 100 years old, had leaking roofs and damp carpets, and had had no investment for many years from the Conservative Government. At the Dryburn hospital, where some members of the present Prime Minister's family were born, the maternity unit was in portakabins in the hospital grounds. We now have two brand new hospitals. Next year a brand new mental health hospital will open just over the border in the City of Durham. Four new doctors' surgeries will be built in my constituency in the next two years. A brand new £11 million health centre is coming to Stanley, replacing outdated surgeries.

Kevan Jones: It is, actually. When I was elected in 2001, my constituents had to wait at least two years for orthopaedic operations. Many of them needed such operations, because they had worked in the mining industry. Now the waiting time is down to less than three months, and those who go on to the emergency waiting list can be operated on within weeks.
	There are challenges in Durham, and I would be the first to criticise the Government for the reorganisation of primary care trusts, which has sucked out money that should have gone to patients. Let me give the hon. Gentleman a positive example, however. In 2001 the new University Hospital Of North Durham was completed, and was seen to have fewer beds than its predecessor. There was a big hue and cry about there not being enough beds, but over the past five years waiting lists have shortened, and the number of beds is now about right. In fact, we may have a few too many. Part of the success story of shorter waiting lists is overcapacity in certain areas. The alternative is to leave things the same and never change anything, but that means wasting money, which is what the Opposition—notably the Liberal Democrats, on many occasions—accuse us of doing.
	Southmoor hospital in my constituency closed recently. It was an old cottage hospital which was no longer needed, dating back to 1920. Next year we will replace it with the new Stanley health centre, which will have X-ray facilities and new treatment rooms. It will be able to do a hell of a lot more with modern rather than outdated facilities—although it would have been easy enough for me, as a constituency Member, and for others to campaign to keep open a hospital that was not fit for purpose and had seen better days.
	Where is all the money going? I can see where it is going in Durham. I freely admit that there have been problems with the way in which it has been administered at times. For instance, PCT reorganisation irritated me like hell: it did not add anything to health provision. But we cannot escape the fact that the health service in my constituency is a hell of a lot better than it was when I was elected in 2001, the year in which the hon. Member for Tatton was also elected.

Kevan Jones: My hon. Friend and constituency neighbour makes the point well that we have got rid of the poverty wages that were paid in the health service in the 1990s. I am sure that we are now all getting letters about nurses' pay, but we should be proud of what the Government have done on nurses' pay in real terms since 1997.
	On compulsory competitive tendering and dirty hospitals, my hon. Friend and I both know from our experience of local government that there were pressures to ensure that the priority in terms of local hospitals was not quality but price. Price was the priority not because there was a concern to bring about a more efficient service; the concern about price led to a lower quality of service and to the major element of every single contract being the price of labour, which was pushed down.
	I welcome the commitment in the Budget speech to an £8 billion investment in education. In my constituency, we can be proud of our record on education; there are new buildings and there is the commitment to continue to replace buildings, and standards are rising, too. They have risen in terms not only of GCSEs, but of the general quality of education. I was proud that Stanley school of technology, which is under the great leadership of Janet Bridges, was in the top 10 most improved schools under the new indices. It is in one of the most deprived communities in my constituency. The teachers there do a sterling job. They do it for two reasons: because they are dedicated to their profession, and because they have support from the Labour Government and money going into their school.
	I and teachers in my constituency are concerned about 16, 17 and 18-year-olds who have fallen out of the education system and out of the employment market; I have raised this matter before. Those people are seldom represented in any statistics. That is why I was pleased by yesterday's announcement that we will make it compulsory—that might be too emotive a word to use—to be in education until the age of 18. A teacher came to my surgery a few weeks ago and asked, "Does that mean that we will force people to do A-levels?" No, that is not what it means. It will force people to take part in training courses and apprenticeships, and it will ensure that they have basic numeracy and literacy skills. That is vitally important. In many constituencies, entire groups of young people aged 16 to 18 are being left out. Unfortunately, a lot of young people drop out of the education system at 14 and never really get back into it.

Helen Jones: Does my hon. Friend recall that when the school leaving age was raised from 15 to 16, exactly the same fears were expressed then as were expressed when it was raised from 12? This announcement is consonant with that, and no one would go back to what we had then.

Kevan Jones: I agree with my hon. Friend; indeed, this is a great opportunity for schools. Schools and further education colleges are up for the 14-to-19 agenda; however, it is not just about putting young people through GCSEs. I must agree that this Government's method of measuring success just through GCSEs has sometimes been a bit crude; we must also look at apprenticeships, and make sure that employers play a part by providing training places. The hon. Member for Sevenoaks mentioned globalisation. If young people do not drop out of the education system at 16 but continue and get the skills and training that they need, that will make this country competitive. Young people who drop out of the education system can also be led into crime, for example; moreover, it is a wasted opportunity. Given the right opportunities, most go on to be productive members of society. Importantly, they have a job, a place in the world and a reason to get up in the morning, as I said earlier.
	I turn finally to air travel. The Chancellor referred yesterday to the proposal to impose a 17.5 per cent. tax on internal domestic air travel, which has been put forward by some of the "green Taliban" in the Conservative party. I am glad that he rejected that proposal. We need to take a more sensible view of air travel. We must recognise that airports such as Newcastle's—I was, but no longer am, a director of it, so I need not declare an interest—are an important economic driver in regions such as the north-east. Taxing people and effectively saying to them, "You cannot travel by air" would not improve the environment substantially, as was proved by the figures that the Chancellor announced yesterday. It would also inhibit economic growth in such regions. If we are going to consider green tax proposals, we need to find more sophisticated, less blunt methods.
	Certain people in the green lobby, including Conservative Front Benchers, seem to be saying that the only way to achieve this aim is to hammer the airline industry, but it produces only 2 to 3 per cent. of this country's carbon emissions. We need to find ways to incentivise the industry to buy aircraft that are more efficient, and to invest in the more efficient use of fuel. We could also consider simple steps such as reducing the amount of fuel used when taking off and landing at airports. Such proposals need some work, but I want to highlight the importance of regional airports. If we make ourselves uncompetitive in a globalised world by imposing an arbitrary green tax, our example will not be followed by certain of our European counterparts, and certainly not by India, China and other such places.
	This Budget is the Chancellor's eleventh, and it builds on the stability that we have enjoyed since 1997. Irrespective of what the doom-mongers in the Conservative party and others say, the people out there realise that our economy is productive and a leading world economy. They realise that their mortgage rates are low, that employment is secure and that this Government are committed to investing in the public services that they value. Interestingly, when I asked the hon. Member for Tatton whether he would match our spending commitments, he said yes. I hope that over the next few weeks, as we get a new spending commitment every week, they will add to his announcement today. Thanks to this Budget and the continuing economic stability that we have come to enjoy, this country can go from strength to strength over the next 10 years.

Paul Rowen: Notwithstanding that point, with a 10p rate of income tax, people automatically keep the money, depending on what they earn, without having to rely on the bureaucratic strictures of Her Majesty's Revenue and Customs to claim it, which results in many of them—through no fault of their own, as I said—owing thousands of pounds. The tax cut relies on a bureaucratic system. Instead of letting people keep the money in their pockets, they have to claim it, with all the problems that result.

Paul Rowen: I have acknowledged that the pension protection plan is welcome, but I am talking about people who, for reasons of mis-selling or poor advice, took out occupational pensions that up to now have paid them no money. I welcome the Government's belated recognition that those pensioners have a fair case, although the amount is not enough.
	I welcome both the consultation on looked after children carried out by the DFES earlier this year and the Budget provisions for additional funding in that sector. Provision for looked after children is extremely poor at present. I am due to meet the Minister for Children and Families after Easter to discuss a private sector company, Green Corns, which runs homes and provides education in several areas. In my view, the company's staff are inadequately trained and supervised, so in the Government's response to the consultation I look forward to proposals for tightening up that sector to ensure that looked after children have the education and support they deserve.
	I welcome the commitment the Secretary of State gave earlier about adults and young people with special needs. Whatever the Government may have been saying for the past few months, the Learning and Skills Council, in its drive to ensure that most of the money for adult education goes to courses that provide accreditation, has failed to take into account the fact that young adults with special needs often need different provision. They do not progress at the same rate as other people and courses for them have been lost. At my local college, the number of places for those young people has been halved and the situation is similar at Oldham college. There is a lack of support and provision for young people with special needs, so I welcome the Secretary of State's commitment to look into the matter. I hope that later in the year there will be concrete proposals to ensure that they have the education they deserve.
	The Budget and the Green Paper published today include commitments for 16 to 19-year-olds, which I very much welcome. The measures on the statute book go back to 1918 so it is good that at last they will be implemented. My hon. Friend the Member for Brent, East (Sarah Teather) questioned the Secretary of State about the figures. Clarification is important. What will the capital investment of £200 million deliver and what is the time frame? The same questions apply to the £700 million. From the revenue figures we have seen, those amounts are nowhere near adequate to deliver the commitments.
	I hope that the Secretary of State will implement in full the Dearing review recommendations about courses. If more young people remain in education and training, there must be appropriate provision. I have been involved in introducing diplomas. Back in 1992, when the Conservative Government allowed schools to introduce BTECs, my school was one of the first to do so. I greatly welcome the use of diplomas and other vocational education and training, but there must be proper funding and, as Dearing recommended, there must be a continuum so that young people can move from and between various forms of education, otherwise the whole system will fall down.
	Over the past 10 years, Rochdale council has been Liberal Democrat, Labour, Liberal Democrat and Conservative working together and is now Liberal Democrat again. Nevertheless, there has been a strong commitment throughout that period to improve education. When this year's results came out, I was delighted to see that Rochdale, building on our earlier success at key stage 3 and key stage 4, topped the league for key stage 2.
	One area where we have not performed so well—and there remains a huge amount to do—is in post-16 provision. I met representatives from the Aimhigher consortium from Greater Manchester last week. They produced figures on the number of young people in Rochdale going into higher education. Despite seven years of Excellence in Cities and Aimhigher funding, numbers in the Heywood and Middleton constituency went up by only 5 per cent. and those in the Rochdale constituency by only 10 per cent. That 10 per cent. means only an extra 50 young people going on to higher education, which is not good enough.
	One of the first things I did when elected two years ago was to meet the Learning and Skills Council to see whether we could develop better sixth form education in Rochdale. I was delighted when a consultation was carried out last year, with the majority of people saying that we needed a brand new sixth-form college. A scheme was put out to consultation and has now been evaluated. It will mean improvements at Hopwood Hall college as well as the building of a brand new sixth-form college. It will cost upwards of £75 million, which is why I asked earlier for clarification of what exactly the £200 million was for. If Rochdale is to perform as well as other constituencies and districts, I believe that investment is vital, so I hope that the Minister will give an assurance that we will see the right level of investment.
	Rochdale was also successful this year in securing Building Schools for the Future funding for our secondary schools. Ministers are making massive claims. Yes, the £150 million is very welcome, but it will not rebuild every secondary school in the borough of Rochdale. It will carry out a partial rebuild of some schools, but it will not compete the job. It is welcome, but people should not run away with the thought that everything is developing as we want.
	I hope that Ministers will also be able to begin to address the backlog in primary schools. Probably like many authorities, Rochdale has more than its fair share of Victorian primary schools. Although we have been able to refurbish some through a private finance initiative agreement, we have not gone far enough.
	In conclusion, as usual with this Budget and this Chancellor, the devil is in the detail. The Chancellor has wasted opportunities to tackle some of the problems that he spoke about. I referred earlier to environmental taxation, but very little has been done about that. We have had a broad commitment to tackle Government waste, but why for goodness' sake could we not do something about getting rid of the number of targets that the health, education and other sectors have to meet? Then there are schemes for ID cards, Trident and nuclear power that will all suck in vast sums of money, which cannot then be spent on improving core services.
	I welcome some of the commitments in the Budget, but if this is an indication of what new Labour is likely to be like under Gordon Brown, I am not impressed and we should be quite worried.

David Gauke: Yesterday we heard what we all assume will be the final Budget from the current Chancellor. I thought that it would be worth while in examining it to look back to his first Budget in July 1997, to assess what progress has been made on the various items that he identified in his opening remarks on that occasion. He identified what he perceived as four weaknesses within the British economy: instability, under-investment, unemployment and waste of talent. It would be fair to say that unemployment and waste of talent were closely linked—indeed, he dealt with them together in his speech—so his very first statistic in his very first Budget speech should probably have referred to three weaknesses instead of four. Perhaps he was setting the tone as far as numbers were concerned.
	The first weakness that the Chancellor identified was instability. He referred to the independence of the Bank of England, which, even at the time, I supported. It has undoubtedly been a success. He also referred to public finances, stating how important it was that they should be sustainable. In our debates yesterday and today, we have heard how there have been three phases for the Chancellor. From 1997 to 2000, he was fiscally prudent, conservative and careful, and he reduced the budget deficit substantially. From 2000 to 2006, however, we saw a sharp deterioration in the public finances. Public spending took off dramatically, while tax revenues at times disappointed. We have seen a sharp tightening since the 2005 general election, and we saw further evidence of it yesterday with the announcement of the public spending plans—the envelope, as it were—for the next few years.
	In assessing the Chancellor's record as a whole in this area, it is worth citing the findings of the Institute for Fiscal Studies, which noted some improvement over the past 10 years but made an international comparison: of the 22 countries for which comparable data are available, 17 improved their structural budget balance by more than the UK. We have been living through a time in which the budget balances should have been getting better, yet the Chancellor's record is not all that impressive. Indeed, he has been able to recover a degree of sustainability in the public finances only by means of a rather sharp slow-down in public spending, in which we have seen spending falling as a percentage of national income.
	During the last general election campaign, my party put forward proposals in which public spending would rise in real terms but fall as a percentage of gross domestic product. The Chancellor's response to our proposals was that they would result in £35 billion of public spending cuts. Applying the methodology that he used to reach that conclusion to yesterday's spending announcement, the Institute for Fiscal Studies has made it clear that the Chancellor would yesterday effectively have announced £8 billion of cuts by 2010-11, or £10 billion worth by 2011-12. The methodology is absurd. What the Chancellor announced yesterday were not really spending cuts in the normal sense of the word. If he is to be consistent in his choice of methodology, however, that is precisely what he did.
	As a member of the Treasury Select Committee, I had the opportunity after the pre-Budget report to ask the Chancellor how he would define a cut in public spending. He evaded my question, saying that we would have to wait and see what the public spending envelope looked like. That was no answer; we do not have to wait and see at all. I had another go at the question when I asked the Chief Secretary to the Treasury what constituted a cut, and he said that it was in the eye of the beholder. We are in the rather curious position of having a new irregular verb, as far as the Chancellor is concerned: "You cut spending. I demonstrate fiscal discipline while increasing real-terms spending."
	One innovation in the 1997 Budget was the introduction of the fiscal rules, and they have served a useful purpose. We all know, however, that the golden rule that current spending must be met by taxation over the economic cycle has largely been discredited by the various changes to the economic cycle, which have always made the Chancellor's job somewhat easier. The Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall), raised one or two concerns about the golden rule and the economic cycle yesterday. I intervened on him yesterday, and I have an opportunity today to raise with the Financial Secretary my concern about what one might call a fiddle.
	In the past, the last year of an economic cycle has always been treated as the first year of the next, and it so happens that those last years have always been surplus years. Yesterday the Chancellor said that the current economic cycle will finish in early 2007, which I think probably means within the 2006-07 financial year, so my question is: will the 2006-07 financial year, which is a deficit year, be treated as part of the next economic cycle? The question seems fairly straightforward, and if the answer is yes, that would be a continuation of the policy that has applied in the past. However, when asked the question, Treasury officials before the Treasury Committee were unable to give an answer, and no answer has been given in response to parliamentary questions that I have tabled. When he winds up the debate, I hope that the Financial Secretary will clarify whether the last year of one economic cycle will continue to be the first year of the next. As far as I can see, the Government will meet the golden rule for the next economic cycle either way. According to their current projections, there is no reason why not. None the less, it is important to have consistency if the golden rule is to have any sort of credibility.
	The second weakness that the Chancellor identified was under-investment. As my right hon. Friend the Member for Witney (Mr. Cameron) pointed out yesterday, the savings ratio has halved since 1997. In addition, business investment in this country is less than 10 per cent. of GDP and has averaged a smaller proportion of GDP than in France, Germany and the United States since 2000. A matter raised in 1997 that is topical again this year is the rate of corporation tax. In 1997, the Chancellor reduced the mainstream rate from 33 to 31 per cent.; he subsequently reduced it to 30 per cent. and, of course, yesterday he reduced it to 28 per cent. In 1997 he boasted that our rate was lower than our competitors' and that we had a competitive advantage, which would help both inward and domestic investment. However, that competitive advantage has been allowed to slip in the succeeding 10 years.
	It would be churlish not to welcome the change in mainstream corporation tax. It is right to lower the rate and to simplify the system by having fewer allowances, exemptions, reliefs and so on. That is to be welcomed. The change was foreshadowed in the report produced by the Tax Reform Commission chaired by Lord Forsyth, and the shadow Chancellor was advocating that approach only this week. In fact, the tax cut can safely be said to be the first of many tax cuts initiated by my hon. Friend the Member for Tatton (Mr. Osborne).

David Gauke: There were some good bits—or perhaps one: the cut in corporation tax. Of course we take some credit for a measure for which we campaigned, but that does not mean that every single aspect of the Budget was correct. Let me give another example. The Chancellor's position on mainstream corporation tax is to reduce the reliefs, allowances and so on, but to reduce the rates as well. That is entirely sensible, but for smaller companies, he has done quite the reverse: increased the rate and increased additional allowances. That seems an illogical, and perhaps unfortunate, position. Perhaps there is an explanation that we have not heard. I raised a point earlier about the curious phrase "legitimate small businesses". There may be an explanation there.  [ Interruption. ] The reference was to "legitimate" businesses, as if those businesses that did not invest were somehow illegitimate, but I do not intend to pursue the point.
	Also on investment, we have the abolition of tax credits for pension funds—the most notorious aspect of the 1997 Budget. Curiously, at the time, in 1997, that was justified as helping investment. The Chancellor referred yesterday to the 125,000 people who lost their work pensions through no fault of their own. He was absolutely right: it was not their fault. That is more than can be said for the Chancellor, whose tax raid has contributed to some of the difficulties with occupational pension funds. However, the Chancellor made an announcement yesterday about the financial assistance scheme.

David Gauke: That was the justification that the Chancellor used at the time for the abolition of tax credits on pension funds. However, with the benefit of hindsight, actuaries calculate that the cost to pension funds has been something like £100 billion since then. Clearly, some occupational funds have been severely affected.
	The hon. Gentleman raised the point about the financial assistance scheme. He welcomed what was said. The issue is important for Members on both sides of the House. I have former workers of Dexion who have been left without their occupational pensions. There has been widespread concern about the plight of those people as a consequence of their occupational pensions no longer being available to them. A lot of us have worked, campaigned and raised the profile of this issue.
	A lot of us have worked with Ros Altmann, a former Treasury adviser who has won the respect of pensioners and MPs on both sides of the House. I spoke to her last night about her assessment of the announcement of £8 billion extra for the financial assistance scheme. She pointed out that there was no new money identified in the Red Book for that. It is going to be paid for a long time in the future. No additional funds have been allocated to it within the Department for Work and Pensions budget.
	There is a reference to getting 80 per cent. of the core pension. A core pension is a concept that has been created by the Government. Essentially, we are talking about only 60 per cent. of the expected pension. The FAS pays out only from the age of 65, whereas many people were looking to retire at 60, and would like to be able to do that. There is no inflation linking. All FAS payments will be taxed, although to some extent perhaps the tax changes announced yesterday will be of some assistance. There is no tax-free lump sum. Widows lose out significantly. On the basis of Ros Altmann's comments—we should at least respect what she has to say—it seems that what the Government have done has not been quite as generous as it first appeared. Indeed, the word used by Ros Altmann was "spin".

Kevan Jones: It is worth nothing that when the hon. Gentleman's party was in power it did nothing at all to protect occupational pensions. I know that he does not speak for the Conservative Front Bench, but is he suggesting that the Government should underwrite completely every single private pension scheme in this country? If he is, that is certainly a huge spending commitment that will not fit in with the spending plans with which the shadow Chancellor said this afternoon he agreed.

David Gauke: I am not suggesting that. However, the Government have lost a case on the basis of maladministration, although they are appealing, and certain legal obligations might thus be forthcoming. This is not a question of underwriting every single private pension in the country, but we must consider what happens when people have been misled, which is the case in the example that I am citing. We need to look carefully at the matter, and I am not sure that the Chancellor's announcement succeeded in dealing with the problem.
	Let me move on to the third and fourth elements of what the Chancellor said in 1997 that remained current yesterday. Welfare reform was at the heart of the 1997 Budget and, to some extent, the 2007 Budget. The right hon. Member for Birkenhead (Mr. Field), who was the Government's first welfare reform Minister, has said:
	"Labour's hugely expensive welfare reform programme has largely failed."
	Aspects of the programme clearly have failed. I do not want to enter a long debate about the new deal, but yesterday we seemed to have the new new deal. Should anyone want to examine the arguments and evidence, I recommend the pamphlet "Reforming Welfare", which was written by Nicholas Boys Smith and produced by the think-tank Reform. Nicholas Boys Smith lists a range of areas in which the new deal has failed and identifies what he would do about it. It is striking that the Freud report, which was commissioned by the Department for Work and Pensions, comes up with almost exactly the same prescriptions as Mr. Boys Smith: more emphasis on outcomes, not procedures; greater involvement of the voluntary and private sectors; and greater conditionality.
	It is also worth considering lone parents. Again, the Chancellor stressed his desire to improve the employment rate for lone parents. There has been an improvement since 1997, but our rate of 56 per cent. is still the lowest such employment rate of any major European country. The Chancellor's proposals—whether in 1997 or 2007—appear to be a form of gentle encouragement, but they do not seem to be working especially well. One can sense the frustration of the Secretary of State for Work and Pensions, who perhaps looks at these things from a slightly different perspective, when he says that we ask very little of lone parents. The Secretary of State's emphasis is on conditionality, whereas the Chancellor has avoided conditionality when addressing welfare reform as a whole.
	Hon. Members on both sides of the House agree that we want to encourage more lone parents to work. However, I think that most Conservative Members hold the view, although it is not necessarily shared by Labour Members, that the best environment in which a child can be brought up is within a marriage, or at least by two parents in a stable relationship. The system has created difficulties because, while the DWP's figures show that a couple needs more to escape poverty than a lone parent might receive, the levels of tax credits do not necessarily address that adequately. On last night's "Newsnight", Stephanie Flanders made the point that one of the beneficiaries of the Budget would be out-of-work lone parents.

Helen Jones: There are two issues that the hon. Gentleman needs to address. First, does he believe that couples stay together merely because of the tax system? Secondly, what does he believe the aim ought to be: to subsidise couples, or to prevent poverty among children? They are not necessarily the same thing.

Kevan Jones: So wedding vows should be changed to "to love and to cherish, till death us do part, or till the tax system changes"?

David Gauke: I will give one point: the Department for Work and Pension has assessed the weekly income that is required for a lone couple with children if they are to escape poverty, and for a couple with children if they are to escape poverty, and those figures are adjusted for rent. The second figure is higher than the first figure, in terms of what the couple and the lone parent would get from tax credits. If I may press on with the subject of tax credits—

David Gauke: No, I have given way. I wish to conclude with this point on tax credits: another clear difficulty with them is that although they try to address the poverty trap for people entering employment, there has been difficulty with people in low-paid employment who move up, whether they are earning more or whether they are moving from part-time to full-time work, because of the very high marginal rate. According to one figure that I have seen, since 1997 the number of people facing a marginal rate of 50 per cent. or more has increased by 874,000. I think that the Government tried to address that yesterday, to some extent, by raising the threshold of the working tax credit, but I would be grateful to learn whether more people will be caught by the higher marginal rate. I do not know whether an analysis of that has been done, but there is concern that more people might be caught. I do not wish to dwell on the administrative difficulties with the tax credits system. I am sure that if I did the Paymaster General would intervene frequently—

John Baron: I suggest to the House that this is an interesting Budget, if only because there is a dispute about whether it is a tax-cutting Budget. The Secretary of State for Education and Skills, who opened the debate, certainly found it difficult to justify the Chancellor's claim that it is indeed a tax-cutting Budget. Most independent economists believe that there is nothing in the Budget to correct the fact that tax freedom day—the day British taxpayers stop earning money for the Government and start to keep the money themselves—has gone from 25 May in 1997 to 2 June last year. All the evidence suggests that small business taxation has increased as well.
	Let us assume for a moment that the Chancellor is right, and that this is a tax-cutting Budget, although most of us doubt that. The Budget is interesting, because we have been told for the past year that we cannot share the proceeds of growth. The Chancellor has confirmed in the Budget that we can do so—we can increase public expenditure but, at the same time, if we believe him, we can have a tax-cutting Budget. Let us at least hope that that has moved on the debate about sharing the proceeds of growth on, and that we do not hear any more nonsense from the Government on the issue.
	In the past 10 years, the Government have taxed too much and thrown money at unreformed public services, which has not resulted in the improvements that we all desire. There is little doubt that the growth in public expenditure as a proportion of gross domestic product has increased—up from 37 per cent. in 1999-2000 to an estimated 42 or 42.5 per cent. this year. Extra money for public services is good in principle—I do not think that anyone would disagree with that—but not enough of those resources have reached the doctors, nurses, soldiers and police on the front line. Too much of the extra money has been soaked up without improving productivity, and Ministers cannot dispute that the cost of inflation in the public sector is running at twice the rate in the private sector.
	We have heard about the good progress by the NHS. Let us not be churlish about it—in 10 years, there have been improvements, just as there were improvements in the previous 10 years. However, I would contend that, given the amount of money that has gone into the NHS, we have not seen the improvements that we should have seen. That is confirmed by statistics that clearly show that three quarters of the NHS spending increases have been spent on cost pressures, rather than on improving front-line services. As a result, productivity in the NHS has fallen by up to 1.5 per cent. in each year since 1997. Labour Members might question those figures but the Chancellor himself, I am led to believe, has similarly been questioning why productivity has fallen in the NHS and has held meetings at No. 11 to discuss the matter. That proves that there is an acknowledgement, even in the Government, that productivity improvements have not been forthcoming, and that that is a concern, given the amount of money that has been put into the NHS.

Helen Jones: That is very kind of the hon. Gentleman. I am grateful for his giving way a second time. I was referring not just to this year's pay rises, but to pay rises over the 10 years of the Labour Government, especially the implementation of "Agenda for Change", which gave many staff in the NHS much better pay and career opportunities. I would be grateful if the hon. Gentleman answered the question. Does he think that those pay rises should not have taken place?

John Baron: The hon. Lady knows the answer to that question already. The point that I am trying to make, which I suggest she is ignoring, is that the NHS should be to the benefit of patients, not just to the benefit of the staff. There is team work involved. However, the bottom line is, yes, there should have been salary increases, but productivity has fallen in the NHS.
	If the hon. Lady wants an example, we need only look at NHS waiting times. Yes, the longer waits have been eliminated, but that has created a bulge in the middle, to the extent that despite the amount being spent on the NHS having more than doubled, average waiting times have fallen by only five days over the past 10 years. These are not statistics spun out of central office but hospital episode statistics produced independently, and they confirm that average waiting times have dropped from 78 days to 73 days over the past 10 years.
	Perhaps more worryingly, median waiting times have increased from 5.7 weeks in 1997 to 7.3 weeks last year. Clearly, once the layers of Government spin have been peeled away, the extra money has not delivered the improvements that we all hoped to see, and which should have been delivered, given the amount of money that has been put into the NHS.
	Let me put to rest the argument that is continually rolled out at the Dispatch Box that because we have seen such a good decline in cancer mortality rates, that is living proof, so to speak, that all that money is having a beneficial impact. That decline has occurred over the past 10 years, but it continues the decline in the preceding 10 years. In other words, it has made no significant improvement to the long-term decline in cancer mortality rates that has been evident for the past 20 to 25 years.
	That argument needs to be challenged time and again. The statistics are available for everyone to see. If we look at the mortality rate for cancer among people under 75, we see that the proportion dying from cancer fell by 12.5 per cent. in the seven years after 1997. The comparable fall in the seven years before 1997 was 12.6 per cent., so all the extra money that has been put in has not made a discernible difference to the long-term trend in declining mortality rates.
	Let me turn to taxation in general. It is evident that the Government simply do not accept the case for lower taxes. We have had 11 Budgets in which, broadly speaking, the tax take by the Government has gradually increased. Only 10 years ago, the UK's tax burden was close to the Organisation for Economic Co-operation and Development average of about 39 per cent. of gross domestic product. Since then, while across the rest of the OECD the burden has fallen to an estimated 38 per cent., in Britain it is forecast to rise to 42.5 per cent.—its highest since 1986. The Government seem to take the view that public services should be micromanaged and that they know how best to spend people's money—that is why the tax take has gone up so much.
	There is a strong case—indeed, almost a moral case—for lower taxation. Evidence the world over has shown that where Governments reduce the tax burden on their countries, over the medium and longer term that increases the prosperity—the growth rate—more than making up for the short-term shortfall in receipts through the initial tax cut. Hon. Members, especially my hon. Friends, must not be afraid to make the case in this House for lower taxes. Tax cuts create a bigger economic cake from which the Government can take their honest share and help the less fortunate in society. I am sure that we all want to achieve those ends, but it is a question of how we do it. I suggest that the best way of creating increased prosperity—the bigger economic cake—is to lower taxes.
	As I said, there is evidence across the world for that, but to find it we need only look across the Irish sea. Throughout the 1990s, liberalisation of the corporation tax laws in Ireland created a huge economic dividend that cannot be ignored. There we have a concrete example of a country making a determined cut in its tax rates and increasing prosperity over the medium to longer term. Real national income per head rose from less than 65 per cent. of the EU average at the beginning of the decade to rough parity by the end of it—a phenomenal achievement. During that period, unemployment tumbled from a high of 17 per cent. to about 4 per cent. The Irish Republic massively increased its share of inward investment from the EU and from US companies, while the UK's share remained about the same. This is not just wishful thinking—there is concrete evidence to suggest that cutting taxes can create that bigger economic cake over the medium to longer term for the benefit of the whole of society, especially its more vulnerable elements.
	At the moment, we have a British Government who are going the other way. In the past 10 years, they have marched in the wrong direction against the trend of lower taxation that has been evident across much of Europe as a whole. There is no shortage of statistics in this regard, and I suppose that one can always bend an argument to one's own way of thinking by choosing the right ones. Nevertheless, the bottom line is that if we are to reach a relatively independent assessment of the tax burden on individuals in this country, a good and objective measure is tax freedom day—the day each year on which the average British taxpayer stops working for the Government and starts working for himself. Back in 1964, tax freedom day fell on St. George's day, 23 April. In 1997, it had reached 25 May. Last year, it was 2 June, and our forecast suggests that by next year it could be as late as 3 or 4 June.
	Perhaps most worrying of all is the increasing burden of corporation tax. I accept that there has been a 2 per cent. cut in the main headline rate, but I am fearful of the effect that the Budget will have on small businesses. There is little doubt—and there can be little disagreement—that the tax take from small businesses under this Budget has increased. The increase from 19 per cent. to 22 per cent. by 2010 for small businesses gives the lie to the Chancellor's claim that this is a Budget for enterprise and prosperity.
	The importance of small businesses to the UK economy should not be underestimated. More than 4 million small businesses make up over 99 per cent. of all enterprises in the UK. The Small Business Service has estimated that small businesses provide 47 per cent.—nearly half—of UK non-government employment, and 38 per cent. of the UK's turnover. Meanwhile, research by the Federation of Small Businesses shows that small firms created a phenomenal number of jobs—550,000 or over half a million—in the second half of the 1990s, compared with just 200,000 jobs created by large companies. These people are not fat cats or multinational businesses. Mostly, they are entrepreneurs who have an idea and are willing to risk their own money to get it off the ground. Small businesses are often the lifeblood of our local communities and high streets in constituencies up and down the country. Over time, many of them grow and contribute even more to the economy.
	Were the Chancellor really determined to encourage prosperity and enterprise in this country, he would not target tax increases on small businesses. He has claimed that the £50,000 capital allowance will result in many small businesses paying less tax, but we simply do not know whether that will be true. Many small businesses will not be able to take up that allowance, particularly in the service sector, which has done so much for the economy in the past. Many economists are still crunching the numbers, but the early indications are that netting off the introduction of a capital allowance will still mean that the Treasury takes hundreds of millions of pounds away from small businesses and into the Exchequer.
	Nor should we forget the effect of bureaucracy. Allowances and credits might be good for business but they also generate more bureaucracy for firms. It is far simpler to give companies a cut in the tax that they pay, and let them make their own decisions about investments in research and development. According to the Federation of Small Businesses, the average small business already spends about 28 hours a week filling in forms for the Government. The Budget will add to that while increasing the burden of direct taxation. When I am out and about in my constituency, I am told by entrepreneurs that that is a growing problem, and that they have to spend a disproportionate amount of time filling in forms rather than concentrating on running their businesses. That bugbear has just been increased further by the Budget.
	All parties might claim to be the party of small business, but the important thing to entrepreneurs is hard cash. It is easy to talk about cutting bureaucracy, but hard to do something about it. Entrepreneurs are fed up of hearing both main parties simply talking about cutting bureaucracy; they want hard evidence that the Government are serious about helping small businesses. Small businesses are fed up to the back teeth of the Government claiming to be the party of small business but failing to deliver and only increasing the tax burden.
	I would like to hear a promise of tax cuts for small businesses. My back-of-an-envelope calculations suggest that if a Government promised a 1 per cent. cut in small business corporation tax for each year of a term, by the end of the five-year term a 5p cut in small business corporation tax would cost the Exchequer only about £1.2 billion. In the great scheme of things, that is not a lot of money, but it would create such good will for the Government of the day.
	This was a disappointing Budget. Whether or not it is tax-cutting is disputable: only time will tell. What we do know is that too much money is going into unreformed public services, and that small businesses will suffer as a result of the Budget. That will be to the long-term detriment of this country.

Peter Lilley: I apologise for having been absent from the Chamber for a while. I had to attend a meeting of the trustees of the Parliamentary Contributory Pension Fund—on behalf of Members who are present, of course.
	It is a pleasure to follow my hon. Friend the Member for Billericay (Mr. Baron). I am indebted to him, as is the whole House, for the devastating figures that he gave showing that, after 10 years and a doubling of public expenditure, the waiting time for operations in the national health service has declined by only five days—from 78 days to 73—and that the median waiting time has actually increased. I predict that those figures will not be mentioned in the winding-up speeches, but I hope I am wrong.
	The newspapers told us that this would be the last Brown Budget. In fact, it was the first instalment of the first Osborne Budget and the last instalment of the last Lawson Budget. It was the first instalment of the first Budget of my hon. Friend the Member for Tatton (Mr. Osborne) because it was he who advocated the cut in the corporation tax rate which the Chancellor has made, and it was the last instalment of Nigel Lawson's last Budget because he set out his ambition to establish a simple two-rate taxation structure with a top rate of 40p and a bottom rate of 20p.
	As you will remember, Mr. Deputy Speaker, when Nigel Lawson made that announcement in his Budget speech it produced uproar. For the first time in history, the Budget debate had to be suspended by your predecessor and could not continue until Labour Members had calmed down, such was their horror at the prospect of an income tax system with just two rates, 40p and 20p.
	I wonder whether those who were so appalled then were among those who cheered yesterday when their own Chancellor announced, rather implausibly, that that had been his long-term ambition too. Perhaps they dwelt on the subject overnight. That may explain why only one Labour Back Bencher is present today to support the final instalment of Lord Lawson's Budget, which—in that respect, at least—Conservative Members welcome.
	In short, this sounded like a Conservative Budget with Conservative tax cuts, coming from a tax-raising Chancellor. Let us be clear about this, however: Conservative Budgets cut not only the rates of tax but the burden of tax, and this Budget increased the burden of tax. We should take account not just of the measures on page 209 of the Red Book—Budget measures which themselves increase the overall burden of taxation—but of those on page 210, which show all the measures introduced since the last Budget but not included in this Budget. Then we see that the total burden of taxation is rising by £2.5 billion this year, and by £3 billion in the subsequent year. This was a tax-raising Budget of the sort that we have come to expect from a Chancellor who taxes by stealth.
	How has the Chancellor achieved the illusion of cutting taxes while increasing the overall tax burden? Largely by scrapping measures that he himself introduced. He introduced the 10p starting rate; now he has scuppered it. He said that he was halving the rate of tax imposed on the working poor; now he has doubled it. He reintroduced allowances on capital expenditure; now he is reducing them. He reduced the corporation tax rate on small companies; now he is raising it.
	The Chancellor of the Exchequer spent his first four Budgets marching his troops up the hill towards a 10p tax band, a 20p small business rate and capital allowances for manufacturing. Now he has marched them back down again, leaving all that behind. He has been described—by my hon. Friend the Member for Tatton, I think—as the Prince of Wales waiting to be King. Actually, he is the Duke of York, who marched his troops to the top of the hill and marched them down again.
	Loyal readers of my pamphlets will know that I have previously accorded that title to the Prime Minister, as in his first Parliament as Prime Minister he abolished grant-maintained schools, downgraded city technology colleges, scrapped GP fundholding and ended patient choice; he then spent his subsequent Parliaments reintroducing grant-maintained schools, which were renamed foundation schools, city technology colleges, which were now called city academies, GP fundholding, which was called practitioner commissioning, and patient choice—which, because the Government could not think of another name for it, they have reintroduced as patient choice. Therefore the Prime Minister has been a Duke of York and will be remembered, primarily, as that.
	That point helps to answer the central question behind the Budget: where has all the money gone? Reorganisations—especially pointless and unnecessary ones which reverse previous reorganisations—are hugely expensive. Palms must be crossed with silver, as Nye Bevan remarked when he introduced the reforms that led to the creation of the national health service. Vested interests must be bought off. In every change, bureaucracy and unions find opportunities to boost pay, reduce work loads, increase the number of posts and reduce overall productivity.
	That is one reason why so much money has been spent to so little effect, but the Budget speech highlights a second reason why this Chancellor has wasted money on an industrial scale, as my right hon. Friend the Member for Witney (Mr. Cameron) said. A Chancellor who measures success by how much money he spends, rather than by the results achieved, ends up spending a lot and achieving very little. The Chancellor set himself the wrong measure of performance, and as a result he has succeeded only in spending money and not in improving services.
	The third reason why there is so much waste is that the Chancellor has a centralising nature. That is not only because he is a Stalinist—he is a believer in the central doctrine of Stalinism, which is bureaucratic centralism—but also because he is new Labour and new Labour has a preoccupation with tomorrow's headlines, as he has demonstrated. New Labour is preoccupied with wrong-footing the Opposition, spin and media manipulation. In order to do such things, it is necessary to centralise. If what is wanted is a continual flow of news manipulated from the centre, the decisions must be made at the centre; it is necessary to indulge in micro-management, setting targets, ring-fencing budgets, detailing regulations and having detailed management controls in the public sector. The Government have, of course, done all that.
	Let me give an example that comes from my own experience of visiting a national health service hospital. Members will recall that the Government got a good headline when they announced their waiting list target. They got another good headline when they announced ring-fenced waiting list budgets for every hospital. They got yet another good headline when they announced that waiting list managers would be appointed to every hospital. So they got three good headlines, but the consequences in the hospital I visited were as follows. The waiting list manager spent his ring-fenced waiting list budget on carrying out operations on Sundays in order to get the waiting list down. It might be thought that that was an expensive way of doing that, as higher rates had to be paid to locum surgeons, but one would expect more operations to be done and waiting lists to be reduced. However, at the end of Sunday all the equipment needed to be sterilised and it was impossible to employ spare sterilising teams on Sunday. Therefore the equipment had to be sterilised on Monday, which meant that no operations could be carried out on Monday. The money for that did not, however, come from the waiting list manager's budget; his budget was ring-fenced. It came from the budget of the rest of the hospital, so he did not worry. As a result there were no extra operations and no other achievements, but a vast sum of money was spent.
	That was a waste of money, which is bad enough, but there was a second consequence which was worse. A surgeon whom I spoke to had established a dedicated open-wound operating theatre and a ward served it that was kept scrupulously clean to avoid any risk of contamination by methicillin-resistant Staphylococcus aureus—MRSA—or any other infection. However, the waiting list manager had to manipulate the waiting list, and some patients were getting dangerously near one of the thresholds, which meant that he might not meet a particular target. So he insisted on dumping some of his patients on that ward, including one with MRSA, another with a liver infection, and a third with another such problem.
	My consultant informant said that he could not operate in those circumstances. He was told by the hospital authorities that he must—they had targets to meet. He said that that would put the health of his patients at risk. He was told that this was a P60 matter, and that he would have to think about it hard. Happily, he has a private income from a medical invention of his, so he was able to call their bluff. He simply gave all the patients a form, saying that if they wanted to go ahead with the operation immediately, they should fill it in and remove any liability that he might have—but that he could advise them to do that only if they were feeling suicidal. So none did. No operations were carried out and their lives were saved.
	This is the implication of detailed micro-management—waste and reduction in quality, instead of improvements and enhancement of quality. Nothing that we heard in this Budget suggests that the Chancellor or the Government have learned the lessons of 10 years of spending and wasting. The Budget is a Budget for short-term headlines and long-term waste. It is a Budget of Conservative appearance, but socialist substance. It is a Budget that cuts rates, but increases the burdens on the British people. It will be remembered for the latter.

Paul Goodman: Indeed. Could it be that they have worked out something about the Budget that the Chancellor did not tell them yesterday? I suspect that the answer is yes, and I shall come to that point later.
	We have however had some good speeches. As one would expect from a member of the Education Select Committee, the hon. Member for Warrington, North (Helen Jones)—the only Labour Member who is actually here—made a detailed speech on education. She said that spending should be focused on the curriculum and teachers; we will doubtless all agree with that. She also said that poverty can be a greater barrier to progress in schools than ethnicity. To judge by my own constituency experience—I have the largest number of Muslim voters of any Conservative Member of Parliament—she is absolutely right.
	The hon. Member for North Durham (Mr. Jones), who is not in his place, gave us a tour of his constituency, where all appears to be well in the national health service. I have to say that that is not my and my hon. Friends' experience, nor was it the experience of the hon. Member for Rochdale (Paul Rowen). In a short speech, the right hon. Member for Leicester, East (Keith Vaz) paid a gracious tribute to my right hon. Friend the Member for Hitchin and Harpenden and touched on one of his passions: the European Union. I do not know whether he is still an enthusiast of the euro, but if he is, the Chancellor will doubtless enjoy the opportunity to talk to him about it.
	My right hon. Friend the Member for Fylde (Mr. Jack) made—as one would expect from an ex-Treasury Minister and the Chairman of the Environment, Food and Rural Affairs Committee—an expert speech. He discussed in some detail his own research into the Treasury's lack of assessment of the value of its tax cuts, and his research into mortgage rates in Britain. If he wants to speak to me about his ideas on taxation and air travel, I will be very happy to listen. I will now commit my colleagues, without having consulted them, and say that if he wants to talk to any of them about inheritance tax, they will see him. I am sure that they will be pleased to hear that.
	My hon. Friend the Member for Sevenoaks (Mr. Fallon), as one would expect from a member of the Treasury Committee, concentrated on the state of the NHS, as did my hon. Friends the Members for West Suffolk (Mr. Spring) and for Billericay (Mr. Baron). The latter made an interesting point about waiting times and used a particular statistic to which I intend to come later. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) gave us a forensic analysis of the Chancellor's record, and I am sure that the Chancellor will enjoy discussing that with him when my hon. Friend questions him at the Treasury Committee. We all know that the Chancellor looks forward to those occasions very much indeed.
	This is the Chancellor's 11th and final Budget. He wishes to be Prime Minister—an honourable aim. He wants to take the country in what he genuinely believes is the right direction. We can all surely agree on what the right direction means—improved competitiveness, better productivity growth, a manageable tax burden, borrowing that is under control, strong savings and value for money in the public services. We need all those things if the British economy is to flourish in the competitive and globalised world economy of this 21st century. For after all we must not, amidst all the headline-grabbing frenzy of yesterday's Budget statement, forget the starkness and seriousness of the international challenge that confronts the British economy. We must at least try to raise our eyes from this debate and look ahead and look abroad.
	By 2050, it is estimated that China's share of world trade will have risen from roughly 18 per cent. to 24 per cent., but North America's will have fallen by 2 per cent. to 23 per cent. The EU's is set to fall by almost half, from 22 per cent. to a mere 12 per cent. So the choice is clear. Even to maintain our position—to keep up with US rather than EU growth rates—we have to compete to prosper, if we are to meet the challenge of the 21st century. The economy must travel in the right direction.
	So we need improved competitiveness. However, according to the World Economic Forum, since 1997 we have dropped from fourth place in the competitiveness league to 10th. Nor is that a one-off. The Institute for Management Development's global competitiveness survey tells the same story. In it, we have dropped from ninth to 21st. Eleven Budgets on, the Chancellor has taken our competitiveness in the wrong direction.
	We need better productivity growth. From 1992 to 1997, our annual productivity growth was 2.6 per cent. Between 1997 and 2001, it fell to 2.1 per cent. and between 2001 to 2005 it fell again, to 1.5 per cent. Eleven Budgets on, the Chancellor has also taken productivity growth in the wrong direction.
	We need an overall tax burden that is going in the right direction, but our tax burden is—hon. Members have guessed it—going in the wrong direction. In 1997, it was £270 billion. Eleven Budgets on, it is £517 billion, a rise of no less than 41 per cent. in real terms—the highest tax burden in the history of the British economy. Business taxes alone have risen by £50 billion since 1997 and this year's Budget will take them up again, by an extra £1 billion next year, as my hon. Friend the Member for Tatton (Mr. Osborne) said earlier, and by £1.8 billion the year after.
	With all that tax, one would have assumed that borrowing was under control. But we look at the Red Book and see that over the next five years the Chancellor is planning to borrow another £153 billion. Each year he will borrow more than the entire budget for schools. Let us not forget that the £153 billion figure is only the Chancellor's forecast. This Budget is actually the seventh one running in which he has had to come to the House and admit that his Budget borrowing forecast was wrong.

Paul Goodman: We told the Chancellor radically to reform corporation tax. Only a few days afterwards, in the Budget he was forced to follow our lead—Conservative policy again. We certainly congratulate him on that. We told him to grow his spending slower than the economy. In his Budget, he is finally sharing the proceeds of growth—Conservative policy.  [ Interruption. ] I can tell the Government deputy Chief Whip that if the Chancellor keeps following Conservative policy, we shall of course congratulate him.
	As the Chancellor has paid us such a tribute by borrowing a few of our clothes, perhaps we should be a little generous. After all, he is fully entitled to argue that having failed to take the economy in the right direction as Chancellor, now, borrowing our approach to get him on track, he will take the country in the right direction as Prime Minister. He is fully entitled to claim that he can rise to the challenges of the 21st century and that the Budget will allow him to turn over a new leaf—greeting his colleagues with a cheerful smile and a listening ear, winning the trust of his most senior civil servants and bringing about a new open style of government, in which decision making is a shared responsibility animated by a generous spirit of give and take.
	I do not ask the House to listen to the views on that matter of a mere Opposition spokesman, but to those of the Chancellor's colleagues—and not just the right hon. Member for Birkenhead, whom I mentioned earlier; and not just the right hon. Members for North Tyneside and for Darlington (Mr. Milburn), who collaborated last year to sabotage the Chancellor's Budget. I bet the Chancellor cannot wait for them to turn up this year.

John Healey: The right hon. Gentleman has been a Treasury Minister. He will also have seen in the Red Book that the total spend for this coming year is £550 million—

Hon. Members: Billion.

John Healey: Billion—thank you. In that context, the figures in table 1.2 that I have mentioned mean that the Chancellor is absolutely correct: this is broadly a fiscally neutral Budget.

John Healey: I do not want to repeat myself, but I will explain that, although the trend rate of growth is 2.75 per cent., we take a cautious base-line view of public finances, using 2.5 per cent., and that is what we base all our public spending decisions on.
	I want to turn to the personal taxation changes. The purposes of the package of reforms are varied. They include: a desire to cut the basic rate of income tax by 2 per cent. for all; taking 600,000 pensioners out of taxation altogether by increasing the age-related allowances; providing direct support for families with children, taking another 200,000 children out of poverty; improving the incentives to work by raising the value of the working tax credit; and simplifying the personal tax system so that we have two rates and two thresholds, by aligning the national insurance contributions upper earnings limit with the higher rate threshold.

John Healey: If the hon. Gentleman will forgive me, I want to respond to the hon. Members who have made contributions to the debate, and who have been in here for longer than he has.
	We are able partly to pay for the package by abolishing the 10p starting rate, but by taking action to increase the child tax credit, the working tax credit and pensioner allowances, we are able to target the resources more directly on our three priorities: families with children, pensioners and work incentives. Despite what the hon. Members for Tatton and for Wycombe and others have said, the results of the package of reforms are that a single-earner family with two children on median earnings—about £27,000—will be £500 a year better off by 2009; four fifths of families will be better off or see no change; households with children in the poorest fifth of the population will be £350 a year better off, on average; and 6.4 million households in the bottom half of the income brackets will gain an average of £4 a week.
	The hon. Member for Sevenoaks (Mr. Fallon) has an established interest in the independence of statistics, which he mentioned today. I wish to make sure that he has seen on page 42 of the Red Book the box headed "Independence for statistics", which covers the reforms that we are making. It also confirms that the budget for the next five years for the statistics board and the statistics system will be £1.2 billion. That will allow the new board to be established and to deliver on its new functions, as well as deliver a high-quality census in 2011.
	The hon. Gentleman and his hon. Friend the Member for West Suffolk (Mr. Spring) voiced concerns about the business taxation changes and in particular about the competitiveness of our rates and regimes with those of other countries. I should have thought that they would welcome the changes that the Chancellor announced yesterday. By cutting the main corporation tax rate from April next year from 30p to 28p, the rate in the UK will be lower than those in America, Germany, France, Japan and all our major competitor countries.

John Healey: Forgive me, I will not. I have referred to the hon. Gentleman and I will do so again if I have time.
	The hon. Member for Sevenoaks asked a question about the resource accounting issues in the NHS. The Department of Health is seriously looking at the case for reversing the past impact of the resource accounting and budgeting deductions from trusts and the future of the application of that accounting system. Once that assessment has been completed, decisions will be announced without delay.
	Essentially, the complaints of the hon. Member for Rochdale (Paul Rowen) boiled down to the claim that we are not doing enough for further education. He made a particular plea for FE in his area. I was fortunate that my hon. Friend the Minister for Higher Education and Lifelong Learning was sitting next to me. In 1997, the total capital available for FE was zero. This year it is £500 million. That is a significant change and a sign of how strongly we support the further education system.
	The right hon. Member for Fylde (Mr. Jack) spoke about the tax law rewrite project. The Paymaster General and I, who have steered some of the tax rewrite Bills through Parliament, appreciate his work on the steering committee. He is interested in the buy-back terms for self-generated electricity. In this Finance Bill, we are legislating to ensure that there will be no income tax take on that. Ofgem is likely to look at the barriers and incentives that may be appropriate to support the development of that sector.
	The hon. Member for West Suffolk is concerned about the North sea tax regime. There are unique characteristics of the North sea that make that tax regime important and distinct from other systems. Off the back of the discussion paper that we published yesterday, we are interested in having a wide-ranging discussion with the industry on that.
	My hon. Friend the Member for Warrington, North made an impassioned speech about education. In particular, she seemed to be concerned about specialist schools and whether there is really any evidence that they work. Specialist schools make up about 85 per cent. of the school system now. The percentage of good GCSEs gained generally within the system is about 58 per cent. In specialist schools, it is 3 per cent. higher, at 61 per cent.
	My hon. Friend the Member for North Durham gave us a clear exposition of the state of the health service.  [ Laughter. ] Well, he talked about the reduction in waiting lists, the increase in staff and the introduction of new technologies. He is absolutely right. He also mentioned that, in a deprived and disadvantaged area of his constituency, there was school that was nevertheless in the top 10—among the most improved schools in the country. I congratulate Janet Bridges, who is the head of Stanley school of technology, her staff and the students on that.
	I promised to come back to the hon. Member for Billericay. The right hon. Member for Hitchin and Harpenden was also concerned about the NHS. Their cry was, "Where has the money gone?" First, there are over 1 million more operations in the NHS than there were in 1997. Secondly, in 1997 the number of people who waited more than 13 weeks for an out-patient appointment was over 330,000. In January this year, it was 103. In 1997, the number of people who waited for in-patient operations for more than six months was over 280,000. In January this year, it was 299.

Ann Widdecombe: I am grateful for the opportunity to raise before the House tonight the issue of the enforcement of the Hunting Act 2004.
	As has often been said, hundreds of hours were taken up in this Chamber debating whether or not there should be a ban on hunting with packs of hounds. Parliament voted for that ban on numerous occasions, and finally the ban became law. It is axiomatic that when the Chamber passes law, we expect it to be enforced. It is quite wrong if there is any group of people who believe that they are uniquely above the law and, furthermore, that their breaches of the law may be blatant and rejoiced in. I hate to say it, but I have even heard hon. Members boasting that they have been hunting since the passing of the ban. We need to ask why the ban is not being properly enforced.
	To date, there has been only one successful prosecution for hunting with packs of hounds. The huntsman of the Exmoor Foxhounds was convicted of illegal hunting, although an appeal is outstanding. The interesting thing is that the judge, when summing up, said explicitly that there are
	"only a small number of wooden areas on Exmoor"
	and thus, in his opinion, that
	"flushing cannot take place legally anywhere on Exmoor."
	Yet, I have not heard that the Exmoor Foxhounds has been disbanded. I have not heard that hunting on Exmoor has ceased. Indeed, all that I have heard is that a public meeting was laid on by the hunt to protest that the law dared to take its course and that a conviction had actually been secured. The sad thing is that that prosecution was not brought by the police or sanctioned by the Crown Prosecution Service. It was actually brought by the League Against Cruel Sports.

Ann Widdecombe: Some hunts, but only a very small number, have registered as drag hunts. The reason why only a small number have done so is that once they register they are bound by drag-hunt rules and are subject to the discipline of drag hunting. Rather than convert to drag hunting, most of them say that they are not chasing live quarry but are flushing, following a trail or doing something else, because they do not want that discipline. The hon. Gentleman raises a most important point: there is a mechanism by which they can say that they are doing one thing but, in effect, do another. I will come on to one of the ways in which that has been monitored.
	Of course, we have known for a long time—we knew it long before hunting was made illegal—that hunts cause tremendous problems. They disrupt traffic, block roads, kill domestic animals, and let hounds get on to railway lines, sometimes with horrible consequences. If any other group in society regularly caused that amount of disruption, grief and trouble, and carried on doing so when a law had been passed to try to stop their activities, there would be an outcry, but that one group in society seriously thinks that it is above the law.
	I was asking why enforcement is not as effective as it should be, and it is partly because there is a lack of understanding on the part of the police. In one hilarious conversation that took place between the police and a hunt monitor who had called them, the policeman said, "But, madam, as long as they're not killing the fox, they're not committing an offence." There is an absence of understanding generally throughout the police force, and an absence of willingness but greater understanding among the senior part of the police force. Let me say, as any reasonable person would, that we know very well that the police are completely overburdened and overworked; they have plenty of things to worry about, and one can understand the temptation on them to say that the issue does not matter, but it does matter if the message is going out that the law may be broken, blatantly and deliberately, and that nothing will be done about it.
	I turn to the activity of hunt monitors. I stress that I am talking about monitors and not saboteurs. Monitors are generally elderly, inoffensive ladies—I have met a lot of them—who go to hunts with cameras and who film what is happening. They have to do that because the police are not doing it. If we leave it to the Royal Society for the Prevention of Cruelty to Animals, the League Against Cruel Sports and other such bodies to gather the evidence to mount prosecutions, which the police take over only at the last minute, if at all, we must have people who gather the evidence. At the moment, that is done by hunt monitors, and I pay tribute to them, because some of them are extremely brave. They are inoffensive, modest people whose motivation is simply to try to ensure that the law is upheld.
	There have been assaults on hunt monitors. There is a film in my possession that I intend to make available to Members of the House later this year—after the decision on Exmoor has been confirmed, so that I do not risk having my film pulled half way through. It shows a large number of incidents involving hunt monitors, including direct assaults and damage to cars. Hunt monitors call the police, but the police do not always arrive, although they sometimes do; however, I cannot show that on my film. In one instance, a lady in her car was hemmed in by two hunt vehicles, or vehicles belonging to people supporting the hunt. She was unable to move and was being threatened—a man was actually bashing on the window of the car—but there was not a policeman in sight. That is simply not acceptable.
	If the police are rather torpid on the issue, the Crown Prosecution Service is even worse. Its default position is that if there is a doubt, and if it is a bit difficult to try to work it out, the benefit of the doubt is given to the hunt. That attitude must be challenged, as it is crucial that the CPS understands the law on hunting. It should not be the case, as the Royal Society for the Prevention of Cruelty to Animals put it to me today, that those cases should arrive in the in-tray of some junior person in the CPS who finds it all a bit difficult, so the cases sit there for five and a half months and, under statutory limitations, run out. The CPS must get a grip on the problem.
	The Under-Secretary is nodding—I am grateful that she is doing so—and I hope that she turns that nod into verbal reassurance when she replies. I have seen that film and the detail that it provides, and I have to say that I was shocked. Even though I knew that hunting was going on, I did not quite realise the risk that hunt monitors ran. We saw the hunting brigade's contempt for the law when some of its members entered the Chamber, believing that they had the right to do so and to defy the law. Because they have been doing that for several centuries, they believe that they have a God-given right to be above the law.
	I mentioned one way of monitoring hunting. It is very expensive, but it has been done successfully. People can go up above the hunt in a helicopter that has monitoring equipment. When that happens, the hunt suddenly obeys the law, so no one sets off after a fox and no one encourages the hounds—they sit there. That would be a very good solution if only there were a billionaire benefactor in the animal welfare lobby who would enable us to put helicopters up over every hunt. Very soon, people would be bored, because all that they could do would be to sit there, obeying the law. They would not follow the hunts, which would not have any supporters and would go broke. Failing a billionaire benefactor, may I suggest to the Minister that the occasional police helicopter over a hunt—I am not saying that we should divert huge resources—would act as a dampener on its very unlawful activities?
	I have a final suggestion to make. I do not expect the Minister to respond on the hoof tonight, but I hope that she will contemplate it seriously. As I said, if the police are not going to go out and collect the evidence, someone has to do so. I believe that we should license hunt monitors—they would be checked to ensure that they did not have a criminal record, and would be respectable people, not "sabs"—and it should be made an offence to obstruct a licensed hunt monitor, in the same way that it is an offence to obstruct a policeman.
	One thing that will be shown on that film, apart from the shocking assaults on hunt monitors, is the way in which the hunt deliberately sets out to make sure that those people cannot film. Its members stand in front of them, put horses in front of them, and hem in their vehicles so that they cannot move. If it were an offence to do so, and if the hunt monitors were licensed to film, we might have more law-abiding hunts—if there is such a thing and it is not a contradiction in terms. I look forward to the Minister at least telling me that she will have give that proposal serious consideration, and to hearing any suggestions from the Government to make sure, first, that illegal hunting is monitored and, secondly, that monitors are given better protection.

Joan Ryan: I accept that the right hon. Lady has in-depth knowledge of this matter. Nevertheless, it is important to clarify the point about convictions.
	It is not for the Government to direct chief constables on how to deploy their resources to deal with hunting. Chief constables are best placed to decide how to deploy the resources available according to operational priorities and objectives. While we have not made funding available specifically to tackle illegal hunting, the rural policing fund was introduced part way through 2000-01, when some £15 million was made available to enhance the policing service in rural areas at no cost to metropolitan forces. The fund comprised £30 million per annum benefiting 31 shire forces. In 2006-07, Ministers agreed to amalgamate the rural policing fund with three other specific grants—special priority payments, London and south-east allowances and forensic grants—to create a single special formula grant to give police authorities more control over how the grant may be used.
	Regarding prosecutions under the Act, three individuals were prosecuted and there are, as the right hon. Lady said, other cases in the pipeline. Court proceedings data for 2006 will be available in the autumn of 2007, when we will see the outcome of several ongoing operations. Anyone convicted of offences under the Act will get a criminal record as well as a fine of up to £5,000. Those are appropriate and proportionate sanctions for such an offence.
	Let me return to what the right hon. Lady said about the need for evidence and the conversations that she reported hearing, with even hon. Members discussing hunting. Anybody who has any evidence should make it available to the police, who have made it clear, as we see in the ACPO guidance, that they will act upon evidence received. We must make it clear that nobody, inside the House or not, is above the law. In a democratic society, we cannot pick and choose what laws we obey, and hunts must obey the law as it stands. It would come as no surprise to us that hunts want the Act to be repealed. For whatever reason they have remained in business—perhaps to try to outlast the ban and wait for a change—there should be consequences if they do not abide by the law. That will depend on evidence being available and action being taken.

Joan Ryan: As I said, anyone who has evidence should make that available. I acknowledge what the right hon. Lady said about helicopters, and serious concerns have been expressed, including by members of ACPO, that a danger might be posed to both humans and animals. We must pay attention to that. The advantage of having this debate is that all those undertaking the activity, dealing with it or enforcing the law will see that these are important issues that are still being considered by the House and the public.
	I am aware that some commentators have suggested that the legislation has loopholes and that that has resulted in limited convictions. That is not the case. The Hunting Act makes it an offence for a person to hunt a wild animal with a dog unless the hunting is exempt. For the purposes of the Act, the word "hunting" has its ordinary English meaning, which includes searching for wild animals, chasing them or pursuing them for the purpose of catching or killing. Hunting requires an intention, on the part of the person rather than the dog—for example, to chase the quarry—so there can be no accidental hunting. We need to be clear about that.
	I also acknowledge the point made by the right hon. Lady, and echoed by my hon. Friend the Member for Nuneaton (Mr. Olner), about hunt monitors. She asked me to consider that point, and I undertake to reflect further on it. In practice, hunting includes a range of activities, from chasing an animal over many miles with the intention of killing it, to deliberately setting one's dog on to a wild animal with the intention of catching it or frightening it away. It would be for the police and prosecutors to decide whether to pursue individual cases and for the courts to decide whether an offence had been committed.
	Inventive individuals can create a large number of theoretical scenarios to call the detail of any legislation into question. In practice, the courts apply common sense to clear legislation. The Hunting Act is clear legislation.
	In summary, I must disagree with the right hon. Lady that the Act is not being properly enforced. ACPO has made it clear on a number of occasions that it will enforce the hunting ban, and I am satisfied that that is being done. Having said that, I welcome the opportunity provided to debate the issue this evening, and am pleased that the concerns have been put on the record. I undertake to reflect further on her points.
	 Question put and agreed to.
	 Adjourned accordingly at half past Six o'clock.